BEE ‘fronting’ is a brave public service to be celebrated
By Martin van Staden, Head of Policy at the Free Market Foundation. He is pursuing a doctorate in law at the University of Pretoria. For more information visit

Businesses should be celebrated for circumventing racial policy. Such a statement is bizarrely contentious today, but when the Free Market Foundation expressed similar sentiments in the 1970s and 1980s, it was regarded as morally virtuous. What was true back then remains true: South African civil society and business have a constitutional responsibility to undermine state racism.

So-called ‘black economic empowerment’ (BEE) is a misnomer in all respects. It is not about black people in general, but rather about a small black elite, it is profoundly uneconomic, and it is not about empowerment, but rather rentseeking. This is why the Institute of Race Relations, South Africa’s oldest, most consistent voice of non-racialism, has rightly taken to calling it ‘blatant elite enrichment’.

If we have to suspend our swift and unyielding moral judgment of race law or policy today because it is shrouded in ‘good intentions’, then we must reserve judgment of historical race law or policy as well.

Others might be prepared to do so, but I am not.

BEE is an evil and unconstitutional government policy that deserves only contempt. It most certainly does not bind anyone in conscience, regardless of how thickly dressed in the rhetoric of ‘law’ it might be.

BEE Commission

The BEE Commission – perhaps the modern, more permanent equivalent of the old Sauer Commission – believes that its condemnations of businesses that undermine the dizzying BEE framework should be taken seriously.

Instead, nobody should answer when TrueCaller warns that the BEE Commission is calling.

The Commission is concerned that 84% of the 1 273 complaints it received since its establishment were related to ‘fronting’. The government defines fronting as ‘a deliberate circumvention or attempted circumvention of the B-BBEE Act and the Codes […] [involving] reliance on data or claims of compliance based on misrepresentation of facts’.

BEE Commissioner, Tshediso Matona, says that civil society groups (which ostensibly represents the nebulous notion of ‘white interests’) have ‘made it their business to attack transformation in South Africa’.

Civil society and business must clear their throats fully when statements like this are made by activists masquerading as civil servants, and answer simply, ‘Yes.’

‘It’s the law!’

Those who allow themselves to get hung-up with the idea that, ‘It’s the law, and that’s that,’ unfortunately skip over important aspects of the social contract.

While it is true that this ‘contract’ is not the ordinary legal contract everyone is familiar with, it is also true that the social contract is not a one-sided imposition in favour of the state.

The social contract, basically, says that the state has certain responsibilities, and for as long as the state fulfils these responsibilities the people under its jurisdiction owe it a duty of obedience. What precisely these responsibilities are is a matter of debate – although the liberals ultimately get it right – but what is not a matter of debate is whether the South African government is fulfilling them.

Whoever you ask, of whatever political persuasion, you will be told that the government is not fulfilling its end of the social bargain. The result is that it is owed no obedience, at least not in conscience.

Even the Constitution, our fundamental piece of positive (man-made) law, clearly and unequivocally makes state racialism unlawful. Among the founding provisions of the constitutional order in section 1 of the Constitution are ‘non-racialism and non-sexism’, after all.

The Constitution makes two, minor exceptions, both touching on ‘representivity’ in state institutions. There is however no provision in the Constitution that may be read as enabling government to impose racism on private bodies.

Celebrate fronting

When politicians try to force owners – of whatever race – to dilute their ownership (to which they have not only a natural but also a constitutional right ensconced in section 25 of the Constitution) by giving shares or control to others, those owners should take every reasonable step to protect what is rightly theirs.

The business group Sakeliga calls this ‘Maximum Achievable Noncompliance’ (MAN). It sounds more radical than it is: MAN simply asks of businesses to focus on their core function – to create value for society – rather than wasting time and resources trying to toe the state’s ideological line.

Black South Africans do not need BEE. They are not perpetual minors in need of coddling. Like everyone else, those individuals with merit – which is not crudely limited to matric, degrees, or experience – will get ahead and those without will fall behind. To say blacks need BEE is to say that most blacks do not have merit, which is a profoundly insulting sentiment to harbour three decades after Apartheid formally came to an end.

And even if the phantom white owners who go out of their way to ensure blacks are not promoted to management existed – they do not – then black South Africans would do better to avoid participating in those businesses entirely. I would scarcely consider it a ‘win’ if I received a promotion at work due to some busybody law, but my boss still despised me due to my skin-colour.

Fronting, then, is nothing more than an act of self-defence against an unnecessary, unconstitutional, and harmful policy. It should be celebrated, because those who front are more interested in focusing on their core business, making money, generating economic growth, and providing sought-after goods and services to consumers, rather than playing political games.

Fronting is brave, because it is risky.

Increasingly government is going to seek legal ways to combat it. But my gut tells me it will always cost less to front – with all the risks associated with it – than to comply fully with the totalitarian requirements of BEE.

The biggest hurdle, in my view, to making the undermining of BEE more common is not the risk of legal jeopardy, but the sentiment harboured by too many South Africans that they owe the South African government a duty of obedience in conscience. Once this hurdle has been scaled – and it is becoming easier to scale as government’s incompetence and incapacity gets more pronounced by the day – BEE will all but collapse under the weight of noncompliance.