Court gives guidelines on new ‘fronting practice’ definition
In the Prasa case, Swifambo had virtually no operational capacity, staff or other resources, so it fits the definition squarely
In a case relating to accusations of state capture, the Passenger Rail Agency of SA (Prasa) versus Swifambo in the high court, the judgment set guidelines on the interpretation and application of the new "fronting practice" definition. Before 2013, fronting was dealt with as the common-law offence of fraud. With the Broad-Based Black Economic Empowerment (B-BBEE) Amendment Act of 2013, which came into effect in October 2014, a "fronting practice" is criminalised under section 130(1)(d), which provides for an offence in the event that "any person knowingly engages in a fronting practice". The definition is broad, vague and ambiguous and drafted in such a way that it may be interpreted inconsistently with certain provisions of B-BBEE codes. The codes and sector charters issued in terms of section 9 of the act have, as a primary function, interpretations to give effect to the objectives of the act. One of the dilemmas created by the new "fronting practice" definition is its wide interp...
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