Is South Africa soft on white-collar corruption?

March 9, 2015

Is our high tolerance for corruption making South Africa a hotbed for criminal activity? When it comes to court rulings for powerful individuals, are court decisions based on facts or fear of retribution?

In South Africa white-collar crime has increased by about 50% in the last 10 years. In fact, a recent survey, involving over 5 000 respondents from more than 90 countries, showed that at least 69% of South African respondents had been subjected to some form of fraud, bribery or corruption in the past two years, compared to 37% of global respondents. Transparency International’s 2014 Corruption Perceptions Index rated South Africa 44 out of 100 and you guessed it- we are on the wrong side of the halfway mark.

The average Joe on the street can expect to serve a heavy sentence if he plans on evading the tax man. Not so for the bigwigs. Powerful head honchos who can afford to buy time outside jail with prolonged court battles and appeals are ending up with no more than a (pricey) slap on the wrist.

Arthur Brown, the Fidentia chief executive accused of embezzling funds belonging to widows and orphans, has spent eight years fighting his charges and now his sentence. Former Tigon chief executive, Gary Porritt and his business partner, Sue Bennett have kept their case in courts for over a decade. The duo, accused of tax fraud and Companies Act infringements after encouraging investors to take their money offshore, have turned to Legal Aid intermittently, returning to their own counsel when costs extended beyond the Legal Aid tariff.

Peter Gardner and Rodney Mitchell, joint chief executives of LeisureNet, were arrested in 2002for fraud amounting to R12million, but remained on R500 000 bail until they had exhausted their resources. In 2011, they were jailed for 12 years, some of which was suspended. So the punishment fits the crime- unless you happen to have an impressive bank balance, of course.

Does this create the perception that SA is soft on corruption? At the very least, it gives the impression that there is a very different justice system for the rich and powerful.

Steven Powell, managing director of the forensics unit at law firm ENSAfrica, says that we are not the only ones struggling to catch big corporate fish. Despite the existence of strong legislation, the US and the UK are also battling to prosecute white-collar criminals.

The best solution is to make a deal as soon as possible to avoid the case dragging on for years, and at least the victim may actually get some money back. Who knows- maybe the embezzler will actually go to jail too, but probably not for very long.

Let’s face it, unless a decent penalty is served, we can only expect more instances of white collar crime in future. Don’t commit the crime unless you’re willing to do the time.

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