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Homegrown tool offers company, govt officials improved conflict-of-interest visibility

26th February 2013

By: Terence Creamer

Creamer Media Editor

  

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The developer of a homegrown risk management application, which enables corporates and government departments to track and audit potential conflicts of interests within their supply chains, reports that the solution is gaining market acceptance domestically and that there is now also potential to export the offering to other jurisdictions where corporate governance rules are tightening.

The software package, which was launched during the second half of 2012, has been built from scratch by six South African software engineers working for specialist credit bureau Inoxico.

CEO André Stürmer tells Engineering News Online that it has been designed primarily to pre-emptively prevent procurement fraud, as well as help companies navigate the rigours of the new Companies Act and the King III corporate governance rules, which stipulate that efforts need to be made to identify and limit potential conflict-of-interest risks.

There is also potential to deploy the system extensively within the public sector, where it could provide the forensic information needed to combat high levels of procurement-related corruption.

Stürmer is also fielding enquiries from the Middle East and Europe where companies are seeking solutions to help lessen their vulnerability to the emergence of tighter governance rules, as well as legislation, such as the UK Bribery Act and the US Foreign Corrupt Practices Act.

Named Association Matrix, the customisable solution provides subscribers with real-time visibility of the relationships senior executives have with suppliers and flags potential areas of fraud and corruption risk.

It also incorporates a subcomponent known as the ‘Director Singularity Index’, which shows up the various directorships held by an individual director.

An initial analysis of the directors of the leading 20 companies listed on the JSE showed that, on average, top directors hold 14 directorships, which Stürmer believes to be higher than the norm internationally, adding it creates both legal and compliance vulnerabilities.

In one instance, it was found that a single individual was sitting on 86 separate boards, which Stürmer described as “staggering”.

Association Matrix draws its core data from publically available company information, principally information that has been sourced from the Companies and Intellectual Property Commission, but that has been enriched and cleaned by Inoxico.

It has already been procured by large manufacturing and financial services entities, as well as a handful of government departments and State-owned companies.

The individual subscribers draw on Inoxico’s secure database, but also populate the system with company-specific information relating to their directors, executives and suppliers.

None of the company-specific information can be used to update the centralised database, and is typically used by internal forensic teams, company secretaries and high-level executives.


 

Edited by Creamer Media Reporter

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