Hon Rayi, let me start by saying that whatever kind of penalties ... So, if you are found guilty, the penalty is not only that you may lose that contract; it also could include imprisonment, a fine of up to 10% of a company's turnover, been banned from state contracts for up to 10 years and be entered into a register of tender defaulters maintained by National Treasury. The fine, I should indicate, can be a fine against the company and a fine against the individual. So, that is the first area.
It is, of course, possible that you may find individuals who seek to reinvent themselves in new corporate guises. As we strengthen our systems, I hope we will in future be able to increasingly track
individuals like that. So, our call would be onto the public. The eyes and ears of a democracy are the people. Where our people see instances of fronting, including where it may include someone who has been involved in a practice like that previously, they should please come forward.
Eventually, what will really stamp fronting out is if we are able to successfully prosecute and people are taken to jail for fronting, which is fraudulent misrepresentation. The reason the legislation is so tough is because fronting damages a legitimate business. You would have two companies: One that is fronting; and the other one a genuine black-owned company. The fronting company damages the genuine company economically.
The other thing is that fronting undermines the very purpose of public policy. It illegitimately bypasses the laws passed by this Parliament. So, we have to be tough on it. Here, I am not talking about instances where there may be a dispute of fact or where a party acts in good faith. We are not talking about that. We are talking of egregious examples where companies misrepresent in order to obtain a BEE score.
There is perhaps a good example that I can cite: There was a court case in 2017 involving Prasa - the government train agency - and Swifambo Rail Leasing, which was a company that procured trains that have become big issues. The court in that instance found that Swifambo was really acting as a front for a Spanish company called Vossloh.
It was a token participant that Vossloh - the Spanish company - maintained control of the operations, the appointment of managers and Swifambo's role was limited to minor administrative activities. It went on and on and it codified for us what fronting represents. So, there is an example of us actually ensuring that the law takes its course and that more than anything else, good information systems will stamp out these kinds of practices. Thank you.