Legal Ramifications for B-BBEE, ED & SED Fronting/Avoidance

[aB-BBEEuser]

Good Day

I work for a company that assists people with their B-BBEE scorecard. Last year we lost possibly a lot of money because a company decided not to do their 3% ED & SED donation "until they catch" him. He is said to be doing his B-BBEE certificate through a friend which probably means a false B-BBEE level (avoiding the donation with fake proof) or he is fronting (http://www.thedti.gov.za/economic_empowerment/fronting.jsp).

Because we do not do B-BBEE ourselves, only assist companies' with their scorecard through a company that deals with scorecards, we are not too clued up on the matter. What are the exact legal ramifications for avoiding becoming B-BBEE compliant for a QSE, the ramifications for a false/fronted scorecard and the ramifications for not dong the ED & SED donations required by law? Please also post the source. We hear there is jail time for avoiding the ED & SED donation, but I cannot find proof.

While, yes, we do make money if he uses our company, we do not want to see people bypassing a system put in place to help the public just to save some of their cash.

Thank you for your time!




TL;DR We need proof of the legal ramifications for a company faking their B-BBEE scorecard or avoiding their ED & SED donations

 

[Paul Hjul]

you should probably register as a company rep ...

also you will hopefully find a tough crowd on the destroyer of a massive component of our economy that is BEE


The ramifications are very much unclear and the dti is blowing a lot of hot air to try to induce fear (FUD) as part of getting compliance with a really perverse system.

 

[aB-BBEEuser]

While I can agre B-BBEE is not the best thing for this country and is in actual fact legal discrimination, it is unfortunately the law. We deal with B-BBEE and anyone avoiding that law affects business for us. This account is registered under a temp email and pseudonym for the safety of our company and the company in question. The company avoiding their donations and certificate are quite large. We do want to report them to the DTI, but first we would like to know the exact legal steps government takes if they discover this information to possibly avoid causing a big issue out of what may be plain ignorance and stubbornness on their behalf.

I hope someone can provide us with sourced information, this matter is causing some issues with business.

 

[Paul Hjul]

your company needs to consult with an attorney in the field and pay for same advise - clearly this is a commercial interest matter

The devil is in the details and any broad stroke information you can get on a forum will need to be cross checked by your company appointed legal representatives. Really it isn't a good idea - and it is opportunistic - to try to sherk out commercial attorneys practice when you are dealing clearly with a commercial issue.

As suggested in my first post the dti really aren't doing much to create certainty in any area of the law - the pooch being screwed in everything the dti touches - and a lot of hot threats are being punted and proclaimed necessary. One of the resounding piles of bull**** in the Zumastration - an idea punted by our resident in-House FUD machine as well - is the artificial necessity of a draconian criminalizing clause, so we are seeing the dti propose in various forms introducing criminal clauses into statute tied to what is generally an administrative issue. At the moment though the applicable statutes don't include the draconian ****up that is found in this Bill:
http://www.dti.gov.za/economic_empowerment/docs/B-BBEE_amendmentbill_nov2012.pdf
which is nicely discussed by the moron in charge of it:
http://www.gov.za/speeches/view.php?sid=41672

However to date it does not appear that Zuma has braced himself for the onslaught that bringing the Bill into law will trigger - especially in the form of legal challenges - especially after the DA snafu on the issue.

Lots of things, like knowingly presenting a fraudulent BEE certificate in a tender document, are already well covered by either basic statute or common law.

As I see it you are asking the wrong question - their non-compliance and what the dti does really shouldn't matter half as much as the question of whether not reporting them will have any legal ramifications for your business.

 

[BandwidthAddict]

I think I'm smelling shakedown.

 

[aB-BBEEuser]

Thank you, Paul Hjul, for your detailed answer! All you have said will be taken into account. We do not want to consult lawyers because then legal charges are incurred for what will probably be a fruitless situation. We definitely want to avoid legal ramifications on our side due to legal costs, we do not have the funds to fight a lawsuit. To be honest, I wish we had more logical thinkers like you in Government. Everyone is too obsessed with filling their pockets that they see numbers and fail to realize each number represents a human with a life that they control. Hopefully, one day, we have a Government that cares about society. Again, thank you for your time and advice, fighting large companies just seems like suicide from any angle we look at it.

@BandwidthAddict While it can be seen that way, I promise it is not. If I had to explain the full story, you would be on our side but you would know too much about us and that may cause issues. Basically know this: we try get donations for an NPO we have dealt with for a very long time that creates SMEs as well as has several community projects running which gives the donor points on their scorecard (most common way to add points). When some greedy corporate owner earning between 5-35M (over 25M in this case) a year after tax can't donate the cash he legally has to and then still uses a fake B-BBEE scorecard, they deserve to be reported. We, the middle and lower class, pay taxes to cover what he avoids while his large corporation crushes small businesses and he complains about how expensive his new Audi is on petrol compared to his other 12 cars

 

[koeksGHT]

Thank you, Paul Hjul, for your detailed answer! All you have said will be taken into account. We do not want to consult lawyers because then legal charges are incurred for what will probably be a fruitless situation. We definitely want to avoid legal ramifications on our side due to legal costs, we do not have the funds to fight a lawsuit. To be honest, I wish we had more logical thinkers like you in Government. Everyone is too obsessed with filling their pockets that they see numbers and fail to realize each number represents a human with a life that they control. Hopefully, one day, we have a Government that cares about society. Again, thank you for your time and advice, fighting large companies just seems like suicide from any angle we look at it.

@BandwidthAddict While it can be seen that way, I promise it is not. If I had to explain the full story, you would be on our side but you would know too much about us and that may cause issues. Basically know this: we try get donations for an NPO we have dealt with for a very long time that creates SMEs as well as has several community projects running which gives the donor points on their scorecard (most common way to add points). When some greedy corporate owner earning between 5-35M (over 25M in this case) a year after tax can't donate the cash he legally has to and then still uses a fake B-BBEE scorecard, they deserve to be reported. We, the middle and lower class, pay taxes to cover what he avoids while his large corporation crushes small businesses and he complains about how expensive his new Audi is on petrol compared to his other 12 cars

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