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B-BBEE Commission scraps Fronting Seminar

B-BBEE Commission scraps Fronting Seminar

Good news for the ‘Stop the Fronting Seminar’ campaign!

Earlier today a statement was released by the organisers of the “fronting seminar” stating the seminar has been cancelled [1]. This followed the Black-Broad Based Economic Empowerment (BBBEE) Commission’s ruling that the seminar had to be cancelled and those who registered had to be refunded [2].

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Last week a petition against the seminar was started on awethu.amandla.mobi. The petition asked, among other things, that the Departments of Trade and Industry and Small Business Development should intervene and prevent the seminar from going ahead as it promoted “fronting”.

In today’s statement, the seminar’s organisers claim the message and purpose of the seminar got lost in their execution of “an aggressive style of marketing”.

“[T]he message that came across”, they claim “was that the seminar’s purpose was to teach and inform people on how to front and circumvent the rules as regards to compliance thus contravening the BBBEE codes and therefore the laws of the country.” In contrast, the seminar’s intention was reportedly to:

• Have a discussion on what fronting is and why this is against the law as per legislation;
• Teach businesses what the rules are as regards to compliance and how to apply them;
• Educate on the benefits of embracing transformation as the policy in our country as opposed to fearing it and trying to avoid it; and
• Inform on the legal consequences of “fronting” and attempting to “loophole” the BBBEE legislation.

While we welcome the cancellation of the seminar, we don’t believe the intention or purpose of the seminar was not to promote fronting. In addition, after setting up our campaign we received threatening emails, as well as threats of legal action by the fronting seminar organisers and sponsors. Organisers in these emails even went as far as to claim ‘... this seminar has nothing to do with fronting’ which is quite frankly bizarre statement from the organisers of www.frontingseminar.co.za

The seminar’s original website (which we took screen shots of and verified with google cache hours after they took their site down in the wake of our campaign), which was updated after the petition was launched, presented itself as an “inside story” and claimed that fronting - a practice which the organisers know is illegal - “has a safe zone”.

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The aim of the seminar, according to the original website, was to “offer you commercial principles and applications to comply to [sic] the rules without getting into trouble” (emphasis added).

In case you cannot read the text on the image, this is what it says:

Fronting has a safe zone. Let us show you where it is.

What insight will I gain from attending the fronting seminar in October 2016?

  1. to learn exactly what fronting is and to prepare from a base of clear principles;

  2. to learn where the parameters of the criminal offence is, especially commercial parameters;

  3. to understand the scope of compliance regulations that promote rather than compel;

  4. to understand where the legal parameters are regarding laws that influence the area of fronting;

  5. to know when a contract may be scrutinized and cancelled based on suspicion of fronting;

  6. to understand your extended responsibility to foresee and curb fronting in your vendors;

  7. to know your rights when someone avers that you are fronting, what they should prove re: fronting;

  8. to know what to expect when a fronting investigation is ordered on your business & how to prepare;

  9. to know how to make sure that you stay within the parameters of the safe zone(s) as you trade; and

  10. to know when you are responsible to have foreseen fronting and what the resulting responsibilities are.

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 The following people / entities were encouraged to attend the seminar:

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So, the seminar, according to the original website, wanted to give vendors, suppliers, business owners, procurement managers, accounting personnel and “[v]endors / suppliers who are currently under investigation for fronting” (emphasis added), an inside story of fronting’s safe zone as well as the commercial principles and applications to comply with therules without getting into trouble.  

As mentioned above, the seminar’s website underwent a number of changes after the petition was launched.

The title of the seminar was changed to “Fronting and Compliance Seminar”, with the caveat that fronting is illegal.

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The goal of the seminar was also updated.

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And the presenters and sponsors who were mentioned on the original website (see below) were removed:

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Interestingly, Innoven, one of the sponsors, manages supplier databases for some of the biggest companies in SA, including Anglo. They do security, tax and BEE compliance checks for them. Michelle Laarman was listed as one of the presenters at the seminar is from Innoven.

The importance of this information is that since Innoven supply databases, it gives them power to keep the suppliers as lily white as they want.

After our campaign, the B-BBEE Commission found that “the title of the seminar and its contents…[are not only]...misleading to the public‚ but also…[perpetuate]...fronting practices”.  We call on the B-BBEE Commission to investigate Axidex and Innoven Consulting and take appropriate disciplinary action.

1. See the full statement here: http://www.frontingseminar.co.za/

2. http://www.ftwonline.co.za/article/113107/B-BBEE-fronting-seminar-organisers-forced-to-cancel-event

3. http://www.iol.co.za/business/news/b-bbee-commission-cancels-proposed-fronting-seminar-2062727