With regard to the alleged fronting practice the high court upheld Prasa’s argument that there was ‘fronting’ in contravention of the B-BBEE Act. The contractual arrangement between Swifambo undermined the objectives of the Act. The definition does not require the misleading or exploitation of the parties to the arrangement. Economic empowerment means substantive empowerment. The mere payment of money for the use of a black person’s status is insufficient compliance. It was further hled that the public has a clear interest in the social and economic rights sought to be give effect to in the Act. At the core of the Act is “viable, effective participation in the economy through the ownership of productive assets and the development of advanced skills”. The Act criminalizes conduct that retards the objectives of the Act and sec 130 creates an offence where any person knowingly engages in a fronting practice.
Passenger Rail Agency of South Africa v Swifambo Rail Agency (Pty) Ltd (2015/42219)  ZAGPJHC 177 (3 July 2017) per Francis J.
Excerpts from judgment (without footnotes)
 PRASA contended that Swifambo was not an innocent tenderer for the following reasons:
. . .
 Swifambo denied that it was not an innocent tenderer. It denied that it was involved in any fronting. There was no direct evidence of any involvement by Swifambo in fraud and corruption linked to the award of the contract. It denied that it made an ‘illicit payment” to the ruling party, and was guilty.
 An innocent tenderer would in my view be a tenderer who was not involved in any of the irregularities that were committed when the award was granted to it. When deciding this issue I must remind myself that persons who are involved in illicit deals would always cover their tracks for obvious reasons. The court would then have to examine all the facts that were placed before it and ask itself how it came about that a specific person or organisation was awarded the tender despite all of the irregularities that took place.
 It is unnecessary for me to make any finding whether Swifambo had made an illicit payment to the ruling party. Many organisations do make payments to political parties which they do not disclose. This is not crucial in determining whether Swifambo was or was not an innocent tenderer.
 There is sufficient evidence placed before me that proves on a balance of probabilities that the arrangement between Swifambo and Vossloh constituted fronting. It is clear that Swifambo under the agreement with Vossloh was merely a token participant that received monetary compensation in exchange for the use of its B-BBEE rating. The B-BBEE points were the only aspect that Vossloh could not satisfy. Vossloh could not bid on its own. Instead it concluded an agreement with Swifambo in which its B-BBEE points were exchanged for money. Vossloh maintains complete control over the operations of the business and Swifambo’s role is constrained to minor administrative activities. There is no substantive empowerment evident under the agreement between Vossloh and Swifambo. There is no transfer of skills during the agreement or after.
 The public has a clear interest in the social and economic rights sought to be give effect to in the B-BBEE Act. At the core of B-BBEE is viable, effective participation in the economy through the ownership of productive assets and the development of advanced skills. The B-BBEE Act criminalises conduct that retards the objectives of the Act. Section 130 of the B-BBEE Act creates an offence where any person knowingly engages in a fronting practice.
 Section 1 of B-BBEE Act defines the term “fronting practice” as follows:
“[A] transaction, arrangement or other act or conduct that directly or indirectly undermines or frustrates the achievement of the objectives of this Act or the implementation of any of the provisions of this Act, including but not limited to practices in connection with a B-BBEE initiative –
(d) involving the conclusion of an agreement with another enterprise in order to achieve or enhance broad-based black economic empowerment status in circumstances in which-
(i) there are significant limitations, whether implicit or explicit, on the identity of suppliers, service providers, clients or customers;
(ii) the maintenance of business operations is reasonably considered to be improbable , having regard to the resources available;
(iii) the terms and conditions were not negotiated at arm ‘s length and on a far and reasonable basis. “
 It is clear from a proper analysis of the agreement between Swifambo and Vossloh amounts to fronting since the relationship meets the broader definition under the B-BBEE Act and the relationship satisfies the criteria under paragraph (d)(i) and (ii) of the B-BBEE Act. It reveals that Swifambo’s obligations under the contract are mainly administrative as borne out by clause 9.2 of the contract. Swifambo is obliged to accept delivery, and procure that PRASA accepts delivery of the locomotives in accordance with the delivery schedule; to procure that PRASA transports the locomotives from Cape Town Port up to the delivery point free of charge for Vossloh and to provide Vossloh with written confirmation that PRASA, together with documentary evidence including the approval letter issued by the Department of Transport, for the approval of the transaction as contemplated in the Sale and Purchase Agreement in terms of section 54 of the PFMA, within 6 months after the signature date. In contrast Vossloh has complete control over every aspect of the contract including the appointment of the members of the steering committee.
 There are various examples of the clauses in the agreement between Swifambo and Vossloh that points to what the true nature of the agreement was namely that it amounts to fronting which undermines and frustrates substantive empowerment.
 The agreement between Swifambo and Vossloh also frustrates and undermines the implementation of the provisions of the B-BBEE Act. Section 9 of the Empowerment Act empowers the Minister through notice in the Government Gazette to issue codes of good practice in black economic empowerment that may include inter alia indicators to measure broad-based black economic empowerment.
 Statement 103 entitled “The Recognition of Equity Equivalents for Multinationals” , issued under section 9 of the B-BBEE Act, was introduced in February 2007, under the Codes of Good Practice on Black Economic Empowerment. The statement provides a regime for the recognition of Equity Equivalent Points where a multinational company is unable to comply with the ordinary B-BBEE. The statement provides that the Minister may approve certain Equity Equivalent Programmes and in paragraph 3.4 that such programmes may involve programmes that support Accelerated and Share Growth Initiative for South Africa; the Joint Initiative for Priority Skills; the National Skills Development Strategy. It should also provide programmes that promote enterprise creation in respect of cooperatives that are more than 50% owned by black people; or more than 30% owned by black women; or more than 50% owned by members of black designated groups. It also provides for any other programmes that promote Socio-Economic advancement or contribute to the overall socio-development of the Republic of South Africa. Importantly, the statement provides that a foreign business needs to invest a substantial amount of money into empowerment initiatives in order to qualify for B-BBEE equivalent programmes.
 To interpret the B-BBEE Act in a way that excludes from the definition of fronting practice a relationship such as that which exists between Swifambo and Vossloh, would permit foreign companies that do not comply with the requirements of B-BBEE Act to frustrate its implementation by evading the obligation to invest a substantial amount of money in empowerment.
 The agreement between Vossloh and Swifambo falls squarely within the ambit of paragraph (d) of the definition, which is satisfied where an agreement is concluded in order to achieve or enhance broad-based black economic empowerment status in circumstances in which there are significant limitations, whether implicit or explicit, on the identity of suppliers, service providers, clients or customers, or the maintenance of business operations is reasonably considered to be improbable, having regard to the resources available.
 There is an inherent limitation on the identity of suppliers, service providers, clients or customers under paragraph (d)(i) of the definition of fronting practice in the arrangement between Swifambo and Vossloh, where Vossloh is performing 100% of the work in a foreign jurisdiction, and Swifambo has no knowledge of or access to any of Vossloh’s suppliers, service providers, clients or customers.
 Under the contract Swifambo is obliged to return to destroy any of Vossloh’s, ‘confidential information’, after the contract. Confidential information includes information regarding Vossloh’s business activities, products, services, customers and clients, as well as its technical knowledge and trade secrets.
 In regard to (d)(ii), but for Swifambo’s B-BBEE rating, Vossloh would not have entered into the contract with Swifambo. Swifambo had absolutely nothing to offer Vossloh other than its B-BBEE status. The obtaining and maintaining of compliance with PRASA’s B-BBEE policy was one of the few obligations placed on Swifambo in clause 34 of the contract which provides as follows:
“34.1 The Parties record that, in addition to [Swifambo’s] general obligations regarding Black Economic Empowerment in terms of PRASA ‘s BEE policy, [Swifambo] shall be required to attain the B EBEE targets specified in RFP, by the dates specified in the said RFP.
34.2 [Swifambo} shall be obliged to maintain its compliance with the aforesaid B-BBEE targets in the RFP for the duration of this Agreement and the Sale and Purchase Agreement. “
 This illustrates that the maintenance of business operations is reasonable considered to be improbable given the extremely limited resources that Swifambo had available.
 The definition of fronting practice does not require the misrepresentation of the true nature of the arrangement to the organ of state or public entity concerned and should not be interpreted in a manner that reads such an element.
 It is trite that the public has an interest in the award of public tenders and that the tender process being free from corruption and fraud, and that public money does not land up in the pockets of corrupt officials and business people through inter alia fronting practices. The public also has an interest in economic empowerment, the attainment of which is retarded by such conduct. An interpretation that requires there to be misrepresentation to the organ of state or public entity concerned, would not give effect to those interests. Those interests are given effect to by an interpretation that recognises that fronting practises also exists where organs of state and public entities or individuals within their ranks conspire or collude in such conduct.
 This was recognised in Esorfranki Pipelines (Pty) Ltd and Another v Mopani District Municipality and Others  2 All SA 493 (SCA) where fronting was described as a ‘fraud on those who are meant to be the beneficiaries of legislative measures put in place to enhance the objective of economic empowerment’. The practice of fronting would constitute a fraud on the public where organs of state and public entities or individuals within their ranks conspire and collude to award tenders to a front under the disguise of economic empowerment.
 A fronting practice may be found where organs of state and public entities or individuals within their ranks are complicit in the arrangement and in the absence of a misrepresentation to them.
 The true relationship between Swifambo and Vossloh was obfuscated in the bid. It had indicated that it would rely on the experience and technical capabilities of Vossloh. However at the time the bid was submitted Vossloh was not a co-bidder as defined in the RFP and there was no legal relationship between Swifambo and Vossloh whatsoever. There was no indication that Swifambo would be able to perform. There are portions of the bid which mention the establishment of a joint venture with Swifambo Rail Holdings and/or its subsidiaries, and Vossloh as well as other entities. Swifambo only concluded a contract on 4 July 2013 which was 16 months after the bid was submitted. The tender documents expressly required that the joint venture must already have been in place when they submitted their bid.
 In other parts of the bid Swifambo indicated that there would be no joint venture arrangement. Instead Vossloh would be a subcontractor doing 100% of the work or its supply partner or a supplier.
 Exploitation is not a requirement. The definition only requires an arrangement that undermines or frustrates, the achievement of the objectives of the B BBEE Act or the implementation of its provisions. The relationship that exists between Swifambo and Vossloh amounts to exploitation of the intended beneficiaries, being black people as defined in the B-BBEE Act.
 Swifambo’ s contention that the present case is not a scenario wherein a third party is using a black individual to gain an opportunity to the black individual’s prejudice and is not consistent with the provisions of the B-BBEE Act. The contractual arrangement between Swifambo and Vossloh amounts to a fronting practice and is a criminal offence under the B-BBEE Act. Swifambo’ s involvement in a fronting act also justifies the setting aside of the contract.