White-collar crooks sure they will be able to pay their way out of trouble

Joint effort needed to beat crime
White-collar crooks sure they will be able to pay their way out of trouble
Mar 5, 2011 11:42 PM | By JOHN LOUW

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In South Africa, the lack of effectiveness in bringing perpetrators to book is creating fertile ground for more white-collar crime.

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A dominant attitude is that perpetrators of white-collar crime will never be brought to justice. This culture of arrogance is being fuelled by tough challenges in the prosecuting system, as well as the frequent lack of co-operation between investigating professionals like lawyers and accountants.

As a result, criminals are getting off, encouraging other would-be fraudsters and perpetuating the cycle of crime.

One of the key components of a successful prosecution of a complex commercial matter is teamwork between the disciplines: chartered accountants (CAs), lawyers and other parties involved in the case.

Too often, lawyers - who usually drive the process - include CAs only on the periphery. This is a mistake we will avoid in our forensic services division structure by combining these complementary skills.

This attitude of disregard has resulted in some spectacular prosecution failures, extraordinarily extended pre-trial periods and drawn-out trials. This is especially true in complex commercial matters involving financial instruments such as equities, equity derivatives, commodity options and futures, bonds and other debt instruments.

Limited budgets are another reason for prosecution failures.

It is the responsibility of the National Prosecuting Authority (NPA) to undertake a criminal prosecution, but often budgets are too small. While there is a desire to succeed, it often appears the prosecution process is stymied by political intervention, inertia and low morale. While many public prosecutors are highly skilled and qualified, they are generally not adequately remunerated or motivated. Prosecutions take between five and 10 years to reach completion. And often these fail, as the prosecutors' budgets cannot compete with the perpetrators' ability to pay for the best defence team money can buy.

As a result, SA is a hotbed of white-collar crime. The scale and frequency of fraud here dwarf such occurrences elsewhere, and usually the cases are extremely complex. In the US, for example, white-collar crime is dealt with ruthlessly and efficiently by well-paid, highly motivated and skilled elected officials with access to adequate budgets. For example, Bernie Madoff's fraudulent behaviour was discovered late in 2008, and he has already been sentenced to prison.

In SA, we have not seen such a swift or effective response to our high-profile cases. While crime busts may initially get a lot of media coverage, the case often fades away in the public arena. One of the reasons for this is the tendency for these matters to be settled behind the scenes by means of asset forfeitures or fines. This fuels the culture of arrogance, as criminals view this as a small price to pay.

If we have any hope of fighting white-collar crime in SA, the government needs to take a tougher stance, the professionals involved in the cases need to work more closely together, and the NPA needs to do whatever it takes to bring perpetrators to justice.

•Louw is director of Webber Wentzel's new forensic services division