BEE fronting 'very sophisticated'
The Department of Trade and Industry says it is difficult to monitor BEE fronting.
CAPE TOWN - Black Economic Empowerment (BEE) fronting has become very sophisticated and complex, the Department of Trade and Industry said on Wednesday.
Officials made the comments while briefing Parliament's Portfolio Committee on Trade and Industry on the Broad Based Black Economic Empowerment Amendment Bill.
The draft law seeks to plug loopholes in existing legislation, which has seen some businesses take advantage of the situation.
Director General Lionel October said, "What the current act lacks is a proper institutional mechanism to monitor compliance."
The latest incident of alleged fronting involves Mvula Trust and a R30million tender.
Government will now impose tough penalties against those found guilty of fronting.
The penalties include imprisonment and/or a 10 percent fine on the company's annual turnover.
BEE was first introduced to redress the inequalities of apartheid.