The Department of Trade and Industry (DTI), in cooperation with the Department of Labour, is currently progressing an amendment to the existing broad-based black economic-empowerment (BBBEE) legislation, which could see the criminalisation of private-sector BBBEE fronting and the possible imprisonment of executive managers found to be complicit.

The amendment, which is currently before Parliament, proposes a maximum penalty of ten years’ imprisonment, and/or a fine for individual private-sector executives found guilty of the misrepresentation of corporate BEE points, or a penalty of 10% of total yearly turnover for companies found guilty of fronting.

A maximum penalty of one year’s imprisonment, or a fine, would be imposed on those who failed to report fronting.

DTI BEE chief director Nomonde Mesatywa said in April that the amendment was aimed at pursuing organisations guilty of misrepresenting their empowerment status or that knowingly participated in other schemes which sought to defeat the objectives of transforma-tion.

“BEE has been demonised in the private sector, which is currently not toeing the line when it comes to transformation. Once you start to pierce the corporate veil, very few com- panies that advertise BEE Level 1 accredita-tion practise real transformation.”

These comments came after the Commission for Employment Equity (CEE) released its yearly report, which reflects on the status of employment equity in the country and the progress made in increasing the representation of designated groups in the workplace.

It states that the percentage of blacks employed at top management level has increased by a marginal 2.3%, from 10% of the workforce in 2002 to 12.3% in 2012.

While white representation decreased by 8.9% from 81.5% in 2002 to 72.6% in 2012, this group has retained a more than two-thirds majority in terms of representation at this level.

The report further shows that a higher percentage of blacks are employed in lower management levels.

Mesatywa said the report substantiated government concerns that the private sector had perfected the “box tick” approach to empowerment .

“What we need are black shareholders that are not simply silent partners, but who actively participate in the running of companies. If this does not happen, we will never realise broad skills development or the rise of black professionals,” she emphasised.

Labour Minister Mildred Oliphant, who attended the launch of the CEE report and described its findings as “sad”, stated that, while the department did not want to enforce harsh legislation against BEE noncompliance by the private sector, it felt that it was being forced to do so.

“Certain companies feel that they are not obliged to comply with BEE legislation, despite it being a legal requirement. While we would rather not implement penalties, we do not want this country to deteriorate into a ‘free-for-all,’” she said.

Oliphant further alluded to the possibility that, in future, government might not issue compliance certificates to companies that failed to practise “true” empowerment, which would preclude them from applying for govern- ment tenders or participating in any State-sanctioned work.