As part of my outreach to bring in the perspective of others who confront corruption on the front lines of international business, I decided to start a series of interviews from those who have expertise in their home countries with respect to corruption risk. Today’s Q and A is with Jonathan Le Roux, CFE, who is a Fraud Prevention Specialist in South Africa. I plan to follow up on this interview with other South African perspectives, including political and in-house compliance viewpoints.
Q: Hi Jonathan, perhaps you can tell us about yourself and your background?
I have over 20 years experience spread across Internal Audit, Operational Risk and Fraud Risk Management and have served in several capacities as Internal Auditor, Fraud Prevention Consultant, Director, Head: Operational Risk and Audit to name a few.
I have also operated largely in the Financial Services / Insurance and Banking Sector, following by the Professional Services and Information Technology Sector respectively
I am a Certified Fraud Examiner and extremely passionate about bringing Fraud Prevention back into popularity and this is why the Fit4Fraud brand is so important for people to become more aware about fraud.
Q: So, in a general sense, what is the current state of corruption and compliance in South Africa?
They say that South Africa is the land of opportunity and I truly believe this, but I am just not sure who is seizing this opportunity though.
I see many young entrepreneurs or small business starting up in South Africa, but legislation, competition and funding are critical stumbling blocks that are not easily overcome, especially as a start-up.
We have some of the best legislation and compliance in the world here, but compliance becomes a tick-box exercise while various other illegal acts arise like ‘fronting’ continue to grow. In South Africa, most company investment or business is based on adherence to receiving a B-BBEE (Broad-Based Black Economic Empowerment) certification, so some common “fronting “examples is where they claim that their secretaries, gardeners, drivers, etc are directors in order to fradulently qualify for contracts.
So, in essence those companies place ‘token’ people on paper to comply with the representation, whilst in reality, nothing has changed, this but a paper fraud to get away with the legal requirement and continue to run a business.
Q: Are there some recent examples of this dyanmic which you can share?
As I look close to home, our President Jacob Zuma and his ‘little’ dwelling in Nkandla that has cost the taxpayer R216million, (US$ 19 million) which is slightly off the initial estimate of R27 million (US$ 2.4 million), is now being firmly blamed and placed on the architect and some officials…. But not the President?
Further to this, previous ‘spy-tapes’ that were suppressed back in 2009, that resulted in the decision to withdraw corruption charges against President Jacob Zuma just before he was elected as President, are now being allowed to be viewed for possible reinstatement of the corruption charges…some 5 years later.
There has also been the arresting here in Johannesburg of Organized Crime fugitive Radivan Krejcir who is on charges of murder, money laundering and other associated crimes. Then, we also have the Oscar Pistorius (Bladerunner) trail here, where he was found not guilty on pre-meditated murder charges on Friday, 12th September 2014.
Q: So what is the relevance of this?
Simply put, if you have power, access to funds, ability to delay the judicial process indefinitely and to influence, you can be protected for extended periods of time (or at least until the opposition or State can’t financially continue to support your case anymore) from charges of corruption, fraud, money laundering and even murder.
With one of the best Constitution’s in the world, coupled with compliance acts and laws which are regarded to be on par with what the global legal fraternity has to offer, etc. South Africa still has its challenges and problems. In other words, even with our regulations, there is much work to be done in order to combat fraud, corruption and associated money laundering activities
When true accountability is lacking and leadership is ‘situation dependent’, it is reassuring to know that we have people such as our Public Protector Advocate Thuli Madonsela who represents courage beyond belief. People like Thuli Madonsela are here on the front lines to serve the interests of the people. She has served the public and probed many cases of corruption, maladministration, etc. and has been the receipiant of flack several times for just doing her job.
Q: So what are the possible remedies, first, from a governance perspective?
There is a glimmer of hope and light here, but even recently, the CEO and CFE of the Public Protector’s Office has resigned, which makes me wonder if there is political or other pressure being placed on the Public Protector’s office to ‘pull in the reigns’ on Public Protector Advocate Thuli Madonsela? Those events are highly concerning and show there are still significant institional impediments to fighting fraud.
With South Africa ranking at 72nd out of 177 countries on the Corruption Perceptions Index 2013 Survey (Transparency International) with a score of 42/100, it does not bode well that we are perceived to be so corrupt. But in-county and international perception is reality, whether we believe it or not.
The survey further shows that 90% of those in Sub-Saharan Africa scored below 50% on this survey, where Botswana is ranked the best at 30th with a score of 64/100. And South Africa is just 932 kilometres (579 miles) or 1hour and 16 minutes away by plane! Thus, one can’t blame it on “the region.” The problem belongs to us.
Solutions can’t be placed on one person – like Advocate Thuli Madonsela. We all need to do out part and get involved in our communities, our regions, our companies. We need to start holding people accountable and voicing our dissent when public or state employee ethics and/or levels of integrity are questionable.
Q: So what can be done?
I guess like all things, it starts with individual efforts before greater ones can succeed.
I started a fit4fraud campaign on the 3rd September 2014 and I had 13 days to get support!
The fit4fraud (prevention) campaign was created to harness 100 supporters to start to think about fraud proactively. This has been an interesting exercise, but eventually over 110% of support was received. See link here.
The interesting bit of this is that it was communicated daily (several times) on LinkedIn, Twitter and Facebook to prominent radio stations, radio DJ’s, politicians, anti-corruption networks, etc and a handful clicked to support this initiative. From statistics seen on some tweets, over 140 people viewed the tweet but maybe one or two actually supported it.
Furthermore, out of all the political parties that this was tweeted to, only ONE gave their support and said it was a great initiative. No other comment, support or feedback was obtained from any other political party.
So there is hope out there. It might not be a surge of support (yet), but am hopeful, that even the smallest of efforts – in the beginning – will yield results in the long-term.
Q: What would you advise those wanting to do business in South Africa to think about in terms of corruption? And, for those on the front lines, who are tasked with business development, and who are the most likely to face corruption risk, what would you share with them?
It comes down to researching and planning. Research what you want to invest in or develop in South Africa, then speak to various sources within the public and private sector to gauge a true view of the realities ‘on the ground’ in South Africa.
Where possible, do not rely on or speak to one person. There should be several players or stakeholders involved in majority of deals, not just one person. Furthermore, there should be no request for fees or commission or payments of any sort, so treat any such requests with much doubt. The only time a fee might be charged is when a Tender Document is requested, but this normally a few hundred Rand (US$10)
Beyond this, it is always good to get in touch with those governance bodies like the IIA, ACFE, SAICA, etc. amongst others who have auditors, accountants and fraud examiners to shed more light on the current economic and fraud climate in South Africa.
On the 19th September2014, the South African Police Services (SAPS) released their crime statistics and the only good news heard was that Commercial Crime (where fraud is reported) shows a 13.61 % decrease compared to the previous year – down by 12,460 cases to a reported number of 79,109 cases. But is this a true reflection of ‘winning the war’ on fraud-related crime or is it just a reflection of people not reporting cases as in previous years. That remains to be seen.
How can people find you?
I am but a click and a flight away, but you can find me on the following social platforms by linking on any of the below:
Although I am based in Johannesburg, South AfricaI do travel if you need me to come to you. I always welcome the feedback of others, andI can provide further information and assistance or at least point you to the right sources where you can make an informed decision. Given the challenges I have described, a local, independent, source of information is critical before making investment decisions.
Yours in fraud-fitness
Jonathan