Companies found guilty of “fronting” could be fined between 2% and 10% of their turnover if draft legislation approved by Cabinet becomes law.

Briefing the media on Thursday, following Cabinet’s fortnightly meeting the day before, government spokesman Jimmy Manyi said the executive had approved the publication of the Broad-Based Black Economic Empowerment Act Amendment Bill for public comment.

Amendments to the act included, among other things, the introduction of penalties for non-compliance with certain elements of the broad-based black economic empowerment (B-BBEE) scorecard.

These penalties take the form of a “discount” from overall score.

Nomonde Mesatywa, trade and industry’s chief director for black economic empowerment, told journalists at the briefing that the bill also introduced, for the first time, “penalties for non-compliance” for companies found guilty of fronting.

Fronting occurs when companies misrepresent their contribution to the objectives of B-BBEE in order to gain preferential treatment  when it comes to access to licenses or business opportunities.

Asked what the penalty might be for those found guilty, Mesatywa said the size of the fine would depend on the severity of the offence, but would be “between two and 10% of the turnover of the company”.