Better networking can limit fraud losses

14 August 2019: Skills transfer and greater interaction between the private sector, authorities and skilled fraud investigators will become increasingly crucial to combating corporate fraud.

This is according to Christo Snyman, National Director of Forensic Services at Mazars and Vice President of the International Association of Financial Crime Investigators (IAFCI) Western Cape Chapter, following the completion of a series of seminars hosted by the IAFCI in Johannesburg and Cape Town.

“We were fortunate enough to have Lieutenant General Godfrey Lebeya, National Head of the Hawks, among the speakers at these seminars. He rightly pointed to the fact that there is a dire need for more seminars and fraud conferences in South Africa. We also agree with him when he says that it is necessary to transfer knowledge, and enable the appointment of many more skilled fraud investigators in South Africa.”

In addition to this, Snyman says that seminars such as the ones hosted annually by IAFCI, are also crucial in building close relationships between private sector companies and other key role players. “From the cases that Mazars has come across over the years, we have seen that the companies, who have suffered the highest fraud losses, are those who do not have close relationships with fraud investigators and government entities. Not only is this where one gets support from when fraud has been detected within a company, but the information and skills that one can gain with the support of such a network can help a company to implement much more robust anti-fraud measures.”

Snyman is also able to demonstrate the value of close collaboration between stakeholders with one very recent criminal prosecution. “Mazars supplied evidence in an especially complicated corporate fraud case that actually wrapped up in the commercial court last week. One of our clients was defrauded of around R4.6 million by an employee who had falsified invoices and diverted payments into her own accounts. Ultimately, the perpetrator received a 12-year prison sentence, suspended for 5 years and 3 years correctional supervision. However, the real reason why we are particularly pleased with the outcome of this case was the fact that the client was able to recover all of the missing funds owed to them.”

He explains that, acting on the advice of Mazars’ investigators, and with the assistance of authorities, the client was able to have the employee’s assets frozen almost immediately. “The quick action on the part of the client ensured that the fraudster was unable to liquidate any assets, and immediately ensured that the client could effectively reclaim at least half of the funds that were stolen. The other half of the client’s money was repaid by the employee as part of a plea deal. In this instance, the client was able to effectively rely not only on the advice of the investigator, but also on the close relationships that Mazars had fostered with law enforcement over the years.”

Snyman adds that better networking between companies and other stakeholders connected to fraud investigation, can ensure that more fraud cases are resolved in this manner. “IAFCI hosts fraud information seminars on an annual basis, and the networking opportunities at these events have already benefited many businesses. We believe that all South African businesses should begin to make it one of their priorities to use opportunities such as these to build relationships and get support when they need it most,” Snyman concludes.

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