Last week we started our comment on the BEE Amendment Act with the 1st of 3 newsletters to highlight some of the most important changes – read previous article here.
Punitive Measures
Act 53 contained no express punitive measures for transgression of any of its provisions. The Amended Act expressly criminalises several offences and provides for harsh penalties of up to 10 years imprisonment and up to 10% of the annual revenue of the business involved or both. In addition to the above any person convicted of an offence in terms of the Amended Act may not for a period of 10 years from the date of conviction, contract or transact any business with any organ of state or public entity and must for that purpose be entered into a register of tender defaulters which the National Treasury may maintain for that purpose.
Other than for the reporting obligations discussed above the Amended Act expressly provides that it is an offence to knowingly:
- Misrepresent or attempt to misrepresent the B-BBEE status of an enterprise;
- Provide false information to or misrepresent information to a B-BBEE verification professional;
- Provide false information to or misrepresent information to a public entity or organ of state;
- Engage in fronting practice.
The term ‘knowingly’ as defined in terms of the Amended Act does not mean that the individual involved had intent to defraud or misrepresent. If the misrepresentation happened negligently it would be sufficient to trigger the criminal offence that attracts the penalties referred to above. This places a significant onus on measured entities and verification professionals alike to ensure that the risk of misrepresentation is appropriately mitigated.
Look out for next week’s commentary: Trumping Provision