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Aug 21, 2009

Cipro suspends five staff members after fraud investigation

Cipro CEO Keith Sendwe discusses the alleged fraud uncovered during recent investigations (Videographer: Nicholas Boyd; Editing: Darlene Creamer)
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The Companies and Intellectual Property Registration Office (Cipro) has suspended five of its staff members for allegedly participating in fraudulent activities, CEO Keith Sendwe announced on Friday.

After receiving complaints from companies, Cipro had initiated a forensic investigation in the middle of last year. By December, 143 individuals had been suspected of participating in fraudulent activities, Cipro chief information officer Dr Michael Twum-Darko told a media briefing in Johannesburg.

A further internal fraud investigation, started earlier this year, had led to the suspension of the five employees, all said to be junior staff members, pending the outcome of the investigation.

Cipro planned to prosecute any perpetrators involved in the matter.

A number of cases had also been opened with the South African Police Service against individuals who claimed to be agents of Cipro, said Sendwe.

He explained that the alleged fraudsters had falsely claimed associations with entities that were registered on Cipro’s data base in order to clone legitimate businesses for financial gain.

“A number of companies have incurred considerable financial losses through the callousness of individuals who participate in these fraudulent activities,” he stated.

However, Sendwe and Cipro COO Melanie Bernard-Fryer would not be drawn on how much money was involved in the fraudulent activities, saying only that investigations were continuing.

Cipro had established a multidisciplinary task team to conduct a full investigation into the extent of the fraud, said Sendwe.

Bernard-Fryer said that the organisation was, in collaboration with a number of other parties including the South African Revenue Service (Sars) and the Department of Home Affairs, conducting a comprehensive audit of the 458 000 private companies and the 3,5-million close corporations that were registered with Cipro.

Sendwe emphasised that the organisation had zero tolerance for fraudulent activities.

“It is both inconceivable and unacceptable that this could have happened. We wish to provide our clients with the assurance that we have done everything within our means to block possible avenues that could be exploited in order to commit crimes of this nature,” he said.

In the interim, the organisation was putting measures in place to prevent further fraudulent activities from occurring. These measures included a new customer verification system and a verification system for external agents of Cipro.

Meanwhile, Bernard-Fryer said that Cipro, in collaboration with Sars, would be deregistering about 65 000 companies in the near-term.

While some of these might have been involved in fraudulent registrations, this was mainly as a result of these companies not having paid their taxes or submitting their tax returns to Sars, she noted.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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