How times have changed. As the famous 19th-century showman PT Barnum once said, “There’s a sucker born every minute.” Today, however, if global crime and corruption statistics are to be believed, it appears it is a new scammer who emerges every minute.
The Global Organized Crime Index 2023 found that financial crime is the most widespread illicit activity worldwide. Data and expert opinions, including insights from the 2021 index, indicate that financial crimes – enabled by the internet and society’s growing online presence – have grown significantly in a short period. And no one is safe; financial crimes target victims from all walks of life, from large corporations to individuals, the index found.
Read: Global crime index reveals ‘significant expansion’ of financial crimes
During a media briefing on 28 June, Lieutenant General Godfrey Lebeya (pictured), the head of the Directorate for Priority Crime Investigation (DPCI), shed light on the fraudulent activities criminals are engaging in locally.
The mandate of the DPCI is to investigate, prevent, and combat national priority offences. Lebeya highlighted the unit’s achievements in the fourth quarter of 2023/24. He reported that 547 suspects – 526 individuals and 21 businesses – were brought before various courts across the country. Fraud led to the highest number of arrests, with 224 accused, including 21 businesses.
Gauteng had the most arrests, followed by North West.
Lebeya also noted that 182 convictions were secured, including seven businesses. These convictions included 84 for serious organised crime, 61 for serious commercial crime, and 37 for serious corruption.
Of those convicted, 120 were South Africans, while 55, making up 30%, were foreign nationals.
Money laundering
A case from Limpopo highlights how criminals can manipulate the banking system to launder money. In 2017, two individuals invested R148 65 282 in VBS Mutual Bank, with large sums paid to VBS-affiliated companies as “commissions”. Some funds were laundered through multiple bank accounts.
An amount of R87 600 was paid as gratification to an official, resulting in a significant loss for the Giyani Municipality.
On 5 March, the Hawks’ Serious Corruption Investigation team arrested three individuals, aged 33 to 64, during an early morning raid.
The former chief financial officer (CFO) and acting municipal manager of Greater Giyani Local Municipality, Risimati Hitler Maluleke (64), was arrested in Lulekani on charges of violating the Municipal Finance Management Act (MFMA), corruption, and money laundering.
Nditshedzeni Mashau (42), a former manager: budget and acting CFO, now the CFO of Giyani, was arrested in Giyani for MFMA violations.
Businessman Zwivhuya Goodness Thishonge (33) was arrested in Muhuya village, Thohoyandou, for money laundering.
The trio appeared in the Giyani Magistrate’s Court on 6 March for their first appearance and bail application. Maluleke was granted R25 000 bail, while Mashau and Thishonge received R20 000 bail each.
The case was remanded to the Polokwane Specialised Commercial Crimes Court on 4 July for a pre-trial conference.
Lebeya said a total number of 33 VBS arrests have been effected, and three convictions have been secured.
“We are still working on the remaining 43 from the 76 suspects, some of whom were not identified during the initial Advocate Motau’s inquiry. So far, 2 907 statements have been recorded by the investigation team, and investigations are continuing,” he said.
Siphoning off money
In the Eastern Cape, an accountant siphoned more than R50 million from his clients’ funds over two years. Between July 2020 and September 2022, Jonathan Blow (52), who was the accounting officer for Sunnyridge Superspar and Despatch Superspar, had full access and administration rights to their trading bank accounts.
In addition to the fees he invoiced, Blow unlawfully transferred R40m from Sunnyridge Superspar and more than R11m from Despatch Superspar to his personal bank account. He was arrested on 24 March 2023 by the Gqeberha-based Hawks’ Serious Commercial Crime Investigation team and was remanded in custody.
Blow was convicted on 6 September 2023. He was also notified that he had been struck off the roll of the South African Institute for Chartered Accountants.
“On 7 March 2024, Blow was sentenced to 15 years’ imprisonment for each of the two counts of theft. The eight-year sentence on the second count will be served concurrently with the first count. He will effectively serve 22 years’ imprisonment,” said Lebeya.
Theft of trust fund
Staying in the Eastern Cape, from March 2019 to December 2021, Harold Gerald Henry (46), acting as the financial manager of Strathmore Farm Trust, diverted funds from the trust for personal gain. He transferred money to his own bank accounts, invested in insurance policies, and even directed funds to family members.
Henry disguised these transactions as payments to creditors and employee wages, but suspicions arose when creditors and employees reported non-payment. An internal audit uncovered fake invoices, revealing Henry’s deceit. To cover his tracks, he tampered with computer data and storage systems.
The Gqeberha-based Hawks’ Serious Commercial Crime Investigation Unit took on the case, uncovering Henry’s embezzlement of more than R14m from the trust. He was arrested on 24 February 2023 for theft and was released on bail pending trial.
In August 2023, Henry was convicted, and on 17 January, the Gqeberha Specialised Commercial Crimes Court sentenced him to 18 years in prison.
Fleet administrator fraud
In another case, also from the Eastern Cape, a fraudulent scheme eventually unravelled, revealing a six-year scam that cost Volkswagen South Africa (VWSA) millions.
Autotrust, an auto body repair service provider contracted by VWSA from November 2014 to March 2021, submitted false invoices for services never rendered.
Christo de Jager (60), a fleet administrator at VWSA, aided Autotrust by approving these fraudulent invoices. The gig was finally up when an internal audit detected discrepancies in the billing records. The case was reported to the Gqeberha-based Hawks’ Serious Commercial Crime Investigation Unit.
The investigation uncovered 572 falsified invoices submitted by Autotrust and De Jager, resulting in VWSA suffering a financial loss exceeding R12 million. Further findings showed that De Jager received illicit gratuities from Autotrust on a regular basis.
On 10 March 2023, De Jager was apprehended by the Hawks and subsequently appeared in the Gqeberha Specialised Commercial Crimes Court, where he was released pending trial. On 25 March, he was convicted on 595 counts of fraud.
South African Revenue Service
The South African Revenue Service continues to be an easy target for fraudsters – or so they may think.
Lebeya reported that, at the end of the quarter under review, the DPCI had 783 cases related to SARS. Of these cases, 284 were on the roll, 277 pending a decision, and 222 were still under investigation.
Lebeya highlighted three significant cases.
In KwaZulu-Natal, Dinesh Bhikramdass Chainthoo (48), a member of Econocom 356 CC, allegedly orchestrated a fraudulent VAT refund scheme between January and July 2018. He submitted false declarations which resulted in a loss of R11 880 767.42 for SARS.
Following an internal SARS investigation, the Hawks’ Serious Commercial Crime Investigation took over. Chainthoo was served with summons on 25 March and appeared in the Durban Specialised Commercial Crimes Court on 15 April 15.
The case has been adjourned to 12 July.
In the Northern Cape, Marius Augustine Bocks (54), director of Batsha Ba Tirong Financial Management (Ltd), was fined a total of R800 000 for breaching the Tax Administration Act. Between 2018 and 2019, Bocks’ company submitted fraudulent IRP5 certificates to SARS, falsely claiming corporate income tax returns despite having no employees. This resulted in a loss of R21m for SARS.
The Hawks’ Serious Commercial Crime Investigation team handled the case, leading to Bocks’ arrest and subsequent sentencing on 2 February 2024. He faces either a R600,000 fine or five years in prison, while the company itself was fined R200 000, bringing the total penalty to R800 000.
Also in KwaZulu-Natal, Francis Muleso (43), responsible for eFiling at Gubela Trading, fraudulently claimed VAT refunds from SARS between June 2011 and August 2018. A SARS investigation uncovered that Gubela Trading failed to declare true income and claimed unjustified expenses, causing SARS a loss of R13 832 865.20.
The case was reported to the Point police station and investigated by the Durban-based Hawks’ Serious Commercial Crime team. Summons were issued for Paneled Njova (38) to appear in court on 14 April 2023, and for Meluso on 14 July 2023; a warrant was later issued for Meluso’s arrest. Muleso was apprehended at OR Tambo International Airport in March and appeared in the Durban Specialised Commercial Crime Court on 6 March and 10 May.
The trial was scheduled to resume on 3 July.
Covid-19 Relief Fund crimes
Those who fraudulently benefited from the Covid-19 pandemic are finding accountability catching up with them. Lebeya said the unit continues to collaborate on cases related to the Covid-19 Relief Fund through the Fusion Centre at the Financial Intelligence Centre.
One such case involved Hobzin 103 Trading (Pty) Ltd, which received payment from the Gauteng Department of Education for Personal Protective Equipment on 2 November 2020. While not registered for VAT, the company provided services valued at R2 902 800. Following an investigation by SARS, it was found that the actual prejudice amounted to R370 626.49.
On 22 March, the accused appeared in court and pleaded guilty. Joel Dama received a suspended fine of R200 000.
Additionally, Hobzin 103 Trading was ordered to reimburse SARS R370 626.49.
