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Economic growth is intricately tied to broadening shareholding diversity, skill enhancement, and bolstering small business involvement within supply chains. However, the linchpin to this lies in strategic alignment with the principles laid out in the B-BBEE Act.
The Act sets qualitative objectives often overlooked in favor of the quantitative benchmarks detailed in The Codes of Good Practice (The Codes). This discrepancy poses risks, as amendments to The Act underscore the importance of recognizing the interconnection between these regulatory frameworks. Failure to acknowledge these objectives could result in severe consequences, including imprisonment and substantial fines.
Tasked with safeguarding these principles, the B-BBEE Commission shoulders the responsibility of investigating activities undermining the Act's objectives. Established in 2015, the commission has bolstered its capacity, intensifying the risk for individuals or entities engaging in Fronting Practices.
Directors, managers, and B-BBEE Rating Agency employees are among those susceptible to prosecution for Fronting Practices, emphasizing the Act's comprehensive reach. It unequivocally holds individuals accountable if they reasonably ought to have known about any infringements.
Organizations' over-reliance on external consultants, accountants, and lawyers indicates a deficiency in internal competencies to drive B-BBEE strategies. The Act implicitly designates board members and executives as 'knowing people,' potentially liable if found complicit in Fronting Practices. Addressing internal competency gaps should be a priority for them to mitigate these risks.
Developing robust internal competencies through comprehensive theoretical training is crucial in mitigating risks associated with 'knowing people.' It establishes control points within the B-BBEE process, ensuring compliance without exposure to Fronting Practices.
Implementing checks and balances aligned with policy and procedure is vital for operational governance. 'Knowing people' must be well-versed in identifying Fronting Practices, including misleading claims related to ownership, skills development, enterprise & supplier development, and socio-economic development.
In essence, it's imperative for 'knowing people' to scrutinize B-BBEE advice thoroughly, ensuring alignment with both The Act and The Codes. Organizations should approach their B-BBEE Audit with the same diligence as their financial audit, employing qualified suppliers and adhering to legislation ethically and meaningfully.
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