New BEE Fronting Schemes Involve The Use of Trusts

New BEE Fronting Schemes Involve The Use of Trusts

Businessman Sandile Zungu has warned that big corporates are using community trusts as a sophisticated new way of fronting in BEE deals.
Zungu serves on the president’s Advisory Council on broad-based BEE (BBBEE), as well as on the Brics Forum, incorporating the five emerging economies of Brazil, Russia, India, China and South Africa.

Speaking at an event hosted by the Gordon Institute of Business Science in Johannesburg this week, Zungu said companies were making use of lawyers and accountants to conceal the actual beneficiaries in transactions that include community trusts.


“Community trusts, and lawyers and accountants, are being used as new methods of fronting wherein beneficiaries are not clearly stated,” he said.

“Fronting has evolved and culprits are now using sophisticated methods, including lawyers and accountants, to conceal their deeds.”

Speaking to City Press at the event, Zungu said: “The abuse of trusts is prevalent in all sectors, not just the mining sector.

“It is just that in the mining sector, the participation of communities and employees is a critical component of the Mining Charter, and therefore the use of trusts is visibly prevalent.”

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