HomeHome SearchSearch MenuMenu Our productsOur products

BBBEE: Comply with the EEA or face fines

by , 29 January 2014
Most of the criticism around Broad-Based Black Economic Empowerment (BBBEE) is that while there's a need for transformation, BBBEE isn't being implemented properly. And one of the things that hinder the process is fraud, more specifically fraudulent BBBEE certificates. Read on to find out more about this and the fines that accompany failure to comply with the Employment Equity Act (EEA).

BDlive reports that Keith Levenstein, the CEO of Econobee says fraudulent BBBEE certificates have become so common that verification industry players find several a week.

As a matter of fact, the site reported this week that 'a business associated with empowerment luminary Don Mkhwanazi, Ikhono Communications, is the latest company to be found to have faked its black economic empowerment (BEE) verification certificate.'

The report says this case is ironic in that Mr Mkhwanazi, whose wife is the owner of the company and who is listed as its strategic adviser, is a serving member of the Presidential Advisory Committee on BEE.

Fraudulent BBBEE certificates rife in South Africa

In an interview with Business Day TV, Keith Levenstein says the problem of fraudulent BBBEE certificates is very rife.

'We tend to use the word 'invalid' certificates rather than forged or fraudulent certificates and I tend to find that about 5% of all certificates I've seen tend to be invalid for some reason or another. So it is fairly rife and it shouldn't be happening.'

Levenstein added that the problem is that there isn't a central registry for these certificates. And the certificates get produced either by an accredited verification agency or an Independent Regulatory Board for Auditors (IRBA) approved agency and it gets put out to the particular company who uses it with regard to their supplies and their customers.

'So I might see a BEE certificate that looks alright and it looks completely correct, but it actually isn't and there's no real way for the average procurement officer to take into account if that certificate is fraudulent, if it is correct or if there is something wrong with it,' he said.

While the Department of Trade and Industry (DTI) has been blamed for not having proper controls to curb this, the site says 'the onus has to be on the business or the company itself to follow the right route.'

This is especially important because you'll face huge penalties. And the DTI says the newly gazetted BBBEE Amendment Bill will allow it to impose legal penalties. So be warned.


The DoL is now TWICE as likely to knock on your door…
The DoL has upped the inspections on Employment Equity and every company needs to take notice…


BBBEE: You'll also face the following penalties if you fail to comply with the EEA

The Practical Guide to Human Resources Management says you could face a fine if you don't comply with Sections 16, 19, 20, 21, 22 and 23 of the EEA.

The fine could be between R500 000 and R900 000, depending on the level of contravention.

So when you design your BBBEE targets for employment equity, involve your Employment Equity Committee in:

  • Conducting an analysis to establish the current employment equity status or demographic of your company.
  • Establishing numerical goals in line with the company's BBBEE targets.
  • Developing an employment equity plan to strategise on how you will meet the numerical goals.
  • Including your numerical goals in the Employment Equity Report.

The bottom line is you must get your BBBEE certificate the right way. Also familiarise yourself with the new BBBEE codes if you want to avoid penalties and fines.

Enjoyed this article? Subscribe to receive these free articles in your inbox daily.

Vote article

BBBEE: Comply with the EEA or face fines
Note: 5 of 1 vote

Related articles

Related articles

Related Products