South African fraudsters funding African terror: Werksmans attorney

Millions of rand stolen from local businesses could end up in hands of terrorists, warns Werksmans attorney Berhard Hotz.

He was speaking yesterday in Sandton.

Hotz specialises in helping companies investigate white collar crime and commercial fraud often committed by employees.

He said money that had been stolen from a South African company had landed up in the hands of terrorists at least once.

But client confidentiality and the law that prevents ongoing investigations being made public, so that suspects are not tipped off, means the general public never hears of such occurrences.

He noted a number of risk factors in South Africa that could lead stolen money sent to terrorist organisations.

Terrorists such as Al-Shabaab, Hezbollah, ISIS and Boko Haram operate in Africa, said Hotz. 

They thrived in countries with a “perceived state of lawlessness”.

South Africa's overwhelmed legal system was inefficient when it came to convictions. In South America, organised crime and Hezbollah were connected with the group making money from the drug trade.

He said he said no reason that organised crime in South Africa could not be linked too be to terrorists.

"There is a lack of intelligence [to detect crime]," he said referring to state bodies such as the National Prosecuting Authority and the Hawks that were embroiled in political interference and controversy.

He knew of two fake NGOs, previously based in South Africa, who raised money for “orphans” but the money was instead sent to Islamic terror organisations in the Middle East.

International anti-terrorism organisations had detected that the sale of diamonds funded the global arms trade and would continue to do so as diamonds were predicted to grow in value. 

Hotz argued that mining for diamonds in South Africa, could provide a legitimate "veneer" for terrorist organisations to make money to fund operations, he said.

Additionally. Hotz knew of secret organisations that transferred money from South Africa to Somalia, using passwords, and leaving no paper trail.

South Africa's wealthy companies were not immune from hacking either.

He said highly sophisticated syndicates hacked into blue chip companies with software called ransomware.

Hotz said they stole sensitive information and offered it back in return for massive amounts of money.  This had happened to financial services firm JP Morgan Chase in America and US grocery store chain Target.

"Corporates are under worldwide threat from hacking."

His tips for preventing fraud included:

• Vet every employee that joins the organisation, even the highly skilled, high profile employees. Don't leave background checks to recruitment agencies.

• Check out your suppliers. You would be surprised at how even big companies get conned by suppliers who may supply false addresses and later defraud the client.

• Use software to detect fraud, double invoicing, strange transactions and show which relatives of employees who may be suppliers.

• Have very good IT systems to prevent hacking of data. There are Eastern European syndicates in Ukraine, stealing data with very sophisticated software.