An appraisal of the offence of "fronting" in the context of broad-based black economic empowement (B-BBEE) in South Africa

Abstract

The objective of this dissertation is to examine the new statutory offence of “fronting” within the context of broad-based black economic empowerment (B-BBEE) introduced in South African law. The social and political influence that led to a legislative overhaul of the B-BBEE legal framework is considered, coupled with the inability of the authorities to curb fronting practices in the past. The increase in the levels of sophisticated fronting and significant increase in circumvention and fronting practices following the 2013 legislative amendments culminated in the ultimate deterrent known to authorities, being the promulgation of a criminal offence with hefty sanctions. The origin and DNA of these fronting provisions are investigated to determine their traditional application within the administrative law compared to the new formulation and scope of application as a statutory offence within the criminal law. The criminal liability requirements applicable to the new fronting offence are appraised to determine the criminal legality of the new statutory formulation. Unfortunately, the statutory formulation is unclear, broad and ambiguous and will have to be interpreted by the courts in order to fill the gaps left by the legislature. This will create various constitutional challenges in respect of a person’s right to a fair trial and the separation of powers doctrine entrenched in the Constitution, 1996. Apart from the vague and ambiguous formulation that might not satisfy the requirements of criminal legality entrenched in the Bill of Rights in the Constitution, 1996, further constitutional challenges are expected in respect of the lowering of the criminal culpability standard by the legislature to prevent offenders from easily escaping prosecution by the new fronting offence. The practicalities of effectively enforcing the new statutory prohibitions within the ambit of the relevant legal framework and powers assigned to the various enforcement functionaries are analysed to determine whether the legal mechanism of enforcement meets the objectives of the new statutory offence and the B-BBEE Act of 2003 in general. The question to be probed in this dissertation is whether the new fronting offence is an “overkill” in a desperate attempt to satisfy the broad social and political agenda, rather than pragmatic. Considering all the facts leading up to the adoption of a criminal instrument as a deterring mechanism, this dissertation proves that the present formulation is a “blunt” instrument creating a false sense of security with authorities. This dissertation proposes legal modification and reform of the structure of the fronting offence, as well as a balance in application between various spheres of the law to be effective.