The recent events in South Africa, especially around the VBS failure, forced me to try and understand, our biases towards fraud and corruption. Firstly, according to the Corruption Perception Index 2019 results, South Africa scored 44, a point of improvement from the previous year score of 43. Also, South Africa is one of the 66% of countries whose score is below 50. Seychelles has scored 66, which is the highest in Sub-Saharan Africa, followed by Botswana at 61 and South Africa scored 44 and is number 9 in the region.
After listening to the former PRASA Chairman Popo Molefe’s testimony during the state capture commission, I then questioned myself about our ability as a country to combat fraud and corruption. There have been several notable cases where long-established companies failed, and thus some went into liquidation or financial distress. I will highlight a few of those companies, i.e. VBS, Steinhoff, Tongaat Hullet, KPMG and several State-Owned Entities (Eskom, SAA, PRASA, DENEL, etc.). In addition to the above, are we doing enough to make those responsible face the consequences?
Corporate scandals are not something unique to us as a country, but it is a global concern. This, therefore, made me think about the ENRON scandal and how the regulators and the law enforcement agencies acted on the matter. According to the reports, ENRON former CEO Kenneth Lay could not avoid the might of the law, and he was convicted for fraud. After the collapse of this company, the Sarbanes-Oxley Act was also signed into law to protect investors.
To attract investors into our country, we need to work hard to end this perception. This is because investors are attracted to destinations that will ensure that their investments are safe and cannot be eroded easily. Let all those who are involved and responsible for the demise of these establishments, to face the might of the law. This will be to discourage the mushrooming of fraud and corruption activities, in private and public companies.