Beyond the Rhetoric: Fronting as a Black Business

By Harry C. Alford
NNPA Columnist

Minority business programs came to life as a compliance requirement for Title VI of the Civil Rights Act of 1964.  States and corporations were given the word beginning in 1982, 18 years after the law passed.  Some came willingly but most of time reluctantly, especially in the private sector.

From the start White-owned businesses began to pose  as a minority-owned company. To offset this abuse and corruption, the government required a formal certification process. Those claiming to have minority status had to fill out an application from an authorized source.  This, too, became a faulty process.  Many companies that have been certified as a minority are not minorities at all but simple “fronts.”  There will be a Black, Hispanic or Asian person posing as the owner/operator of the company. The company is really owned by Whites operating behind the scene. Thus, they can get set aside contracts without competing head to head with majority firms. That nasty business started 32 years ago and it is still as bad as it has ever been.  Legally, this is fraud and we must stop tolerating the abuse.

Let me give you a few living examples of how this works.

A major telecom company has a great need for more and more cell phone towers.  Cell phone towers cost around $250 million each. The company finds a slick Black operator and hooks him up with a legitimate cell phone tower manufacturer.  They set him up as a business doing the paperwork for the production of a tower.  When the tower is built, they run the paperwork through him so that the telecom company can declare $250 million worth of business with a “Black owned firm.”  They do this at least four times per year and declare that they are doing more than $1 billion with minority business.  It is a bold lie!

Automobile manufacturers can be even bolder.  One such firm declares that they buy all of their steel from a Black-owned company.  That would be billions of dollars for a company supplying all of the steel for an automobile manufacturer.  Actually, they get a Black guy and have him operate a big warehouse.  The actual steel company sends their product to him and he relays it directly to the automobile company that declares they bought the steel from this sleazy front.

Automobile companies as well as farm equipment companies also like to use the trucking industry as a front operation.  They will claim to be using Black-owned trucking companies to deliver their products.  Actually, the Black business plays the role of a dispatcher overseeing a real trucking company by way of telephone and email. The so called Black-owned trucking company doesn’t own one truck.  Some have the audacity to have the real trucking company put their name on the trucks that are used in this sham.  The companies will report millions and millions of dollars going to Black-owned trucking companies when it is just a public sham.  I have even seen one of these fronts advertising inBlack Enterprise and other magazines.  One automobile company declared a trucking front as “Minority Business of the Year.”

Probably the most abused industry is construction/engineering. There are so many of them I have stopped counting.  It is so disgusting to see a Black person claiming to own an engineering firm with dozens of employees – none of whom are Black. You can find some Blacks claiming to be a construction company with no equipment or Black employees. They are just fronts.  I know of one guy who claims to own a major construction company with offices here and in Europe and Asia.  He is so bold that a couple of years ago he was elected as president of the National Association of Minority Contractors.  This hypocrisy is just that bad!

A while back there was a Black guy claiming to sell antifreeze to one of the General Motors plants in Michigan.  One day one of his barrels of antifreeze tipped over and splashed an employee. The auto worker started screaming as the antifreeze would surely eat his flesh. To everyone’s surprise there was no harm done because it was actually water.  His supplier was duping the front and General Motors at the same time. They went after the front and he did three long years in prison for the scheme. The guy behind the scene was never prosecuted.

There are some major corporations doing legitimate business with Blacks, Hispanics and Asians.  They are to be commended.  The next time you hear about a Black firm doing billions of dollars in business with major corporations please verify.  Figures don’t lie but liars will certainly figure.  I wish the National Bar Association (Black attorneys) would start an initiative to expose and prosecute these front companies along with the corporations that connive with them. We could point them in the right direction.

Harry C. Alford is the co-founder, President/CEO of the National Black Chamber of Commerce®.  Website:  http://www.nationalbcc.org  Email: halford@nationalbcc.org. 

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