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New weapons to fight white collar crime

South African Receiver of RevenueComprising a series of four presentations by senior role players from the South African Police Service (SAPS), the Asset Forfeiture Unit, the Scorpions and Cox Yeats Attorneys, the event was opened by Professor Bonke Dumisa, CEO of the Durban Chamber of Commerce and Industry. After welcoming all, Professor Dumisa said that white collar crime was a problem in South Africa and throughout the world, and needed to be prevented and guarded against. Accordingly, he felt that the Durban CCI should be the major voice representing business interests when dealing with different stake holders to address white collar crime issues, at the same time and with one voice.

In full agreement was Basil “Buster” Carlston, chairman of the Business Against Crime White Collar Crime Task Group and a member of the Durban CCI Safety and Justice Committee who, after thanking the CCI for the use of their premises, announced the first speaker.

By way of introduction, Director Andre Lategan, commander of the commercial branch of the South African Police Service (SAPS) in KwaZulu-Natal, said that he and his team were committed to combating commercial crime in partnership with those they served. They policed a vast area, he noted, that comprised seven policing zones and 183 police stations. Tasked with policing 57 Acts of Parliament, including the Banks Act, Companies Act, Prevention and Combating of Corrupt activities Act and Insolvency Act, the commercial branch concentrated on serious fraud matters only, which were determined by the complexity of the crime, its value and the people involved. Internet fraud investigations had become a major aspect of their operation, with cyber crime being the way of the future, he added. Their mandate also included investigating the organised nature of counterfeiting: one of their biggest problems was white plastic since it was so easy to clone a credit card. In addition, the branch investigated swindles such as the Nigerian 419 scam, which was still catching people despite all the publicity it had received. They also investigated and coordinated information on cloned and washed cheques, altering of credit, debit and petrol cards, “black dollar” cases, kite flying, and the unlawful generation of funds into bank accounts by means of depositing stolen or worthless bills.

The commercial branch currently has units in Durban and Pietermaritzburg, each of which is split into various teams assigned to overt and covert projects within a range of sectors such as government, banking and customs. A major breakthrough had been the establishment of the country’s first specialised commercial crime court in Pretoria with one now established in Durban, which was working well, he said.Finally, he closed by warning that “if something looks too good to be true, it usually is.”

Before introducing the next speaker, Mr. Carlston also praised the concept and workings of the specialized commercial crime court, and noted that the idea had originated in KwaZulu-Natal via the BAC White Collar Crime Group and the KZN commercial crime branch of the SAPS.

Another means of combating white collar crime was through asset forfeiture, said second speaker, Akbar Ally, a senior specialist investigator with the Asset Forfeiture Unit. Asset forfeiture referred to the direct recovery of the proceeds of a crime, he explained, and could therefore be used by law enforcement to combat crime. Essentially there were two paths that could be followed by victims, namely conviction-based and non conviction-based confiscation, for which the National Director had to give written authority, he said.

Confiscated assets were sold on public auction and the money then placed into a criminal assets recovery account (CARA) which exists to fund the fight against crime with the criminals’ own money. Invariably, financial investigations would be run parallel with criminal investigations, he said further, adding that financial investigation was an important tool in the fight against white collar crime. In highlighting the major differences between the two methods of confiscation, Mr. Ally pointed out that while proof of ownership was essential in cases of criminal forfeiture, it was not required in civil forfeiture cases. What was important to note was that forfeiture in a criminal case had to take place after conviction but before sentencing, he emphasised.

In his address on the role of the Scorpions in fighting white collar crime, Senior Investigator Leonard Sherriff, said the unit had a very broad mandate with their key area of operation being the investigation of organised corruption. The Scorpions existed to deal with serious and complex financial crimes as well as traditional organised crime such as drug trafficking, theft and hijacking syndicates, he said, adding that a commission of enquiry had been established to investigate the mandate of the Scorpions in relationship to the SAPS operation.

Infrastructure-wise, the Scorpions had offices in Gauteng, KwaZulu-Natal, Free State, Eastern and Western Cape, but whereas the SAPS had about 20 000 investigators countrywide, the Scorpions had only 250 investigators, so one couldn’t compare capacity, he said. Stakeholders include the SAPS, the National Intelligence Agency (NIA), the Asset Forfeiture Unit, the South African Receiver of Revenue (SARS), various state departments such as the Financial Intelligence Centre, the banks, and the private sector as well as Scotland Yard, FBI and the Chinese Police among others. Mr. Sherriff said further that the Scorpions call centre received calls from the public on a daily basis and that they were currently dealing with a vast number of cases including those of Schabir Shaik, Russell Ngcobo (political violence in KZN), Social Welfare and Medcor (they have already arrested more than 120 people in connection with medical fraud and there are more arrests to come). In conclusion, Mr. Sherriff entreated the business community, the public and the state to fight crime together.

Last up was Peter Feuilherade of Cox Yeats Attorneys who gave an overview of asset recovery from fraud and theft. Essentially there were two forms of recovery for someone who had been a victim of a common crime, he said, namely civil and criminal. It was even possible to attach a person’s pension funds after an incident of theft, fraud or dishonesty against the employer where the employer could prove that it had suffered a loss, either by obtaining a judgment or after receiving an admission of liability by the employee in writing. It was important to strike when the person was first confronted and get them to sign a document admitting their guilt and an acknowledgment of debt, he advised. One could also apply for an anti-dissipation order from the high court which meant that the person’s bank accounts would be frozen and an interdict issued to preserve property. One would have to show that there was a reasonable prospect that assets could be dissipated before judgment was granted. Since it was currently taking 15 to 18 months for a civil case to come to court, the assets could have been disposed of by the time one was able to secure a judgment in this regard, and this “drastic” measure had been introduced to prevent this from happening, he explained. In Section 300 of the Criminal Procedure Act, he pointed out that the court could make an award after an accused had been convicted.: up to R500 000 by a regional court and up to R100 000 in a magistrate’s court according to the latest figures from the Minister of Justice. Those who accepted awards would not be able to claim any further amounts civilly.

Mr. Feuilherade then warned of new legislation such as the Prevention and Combating of Corrupt Activities Act, which was very detailed and extensive compared with the old act. Referring to sections 12 and 13, which deal with fraudulent activities relating to contracts and tenders with public, corporate and private bodies, he pointed out that a person in authority had a duty to report corrupt offenses in terms of the Act. If someone in this position knew about or ought to have known about an offense, he said, and they didn’t report it, they could face a jail sentence or fine, which could amount to five times the value of the gratification. The Act also laid down that any instances of theft, forgery or fraud over R100 000 had to be reported to the police, regardless of whether such loss was due to corruption or not…

Commenting on the new legislation, a lot of which was a response to Internet crime, Mr. Feuilherade said that when the World Trade Centre came down in 2001, the world changed forever in terms of its stance on terrorism and fighting it. Finally, he warned that while no one had been prosecuted in terms of the new legislation, which had been promulgated in 2004, it was a sleeping monster that would start stirring sooner or later.

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