Page 42 - IRMSA Risk Report 2021

3.3
FAILURE TO ROOT OUT AND/OR CURB DEEPLY

ENTRENCHED CORRUPTION
The President has stepped up efforts to deal with corruption, the Zondo Commission has provided valuable “ammunition” for the
Hawks and Special Investigations Unit to make long awaited arrests. Despite these efforts, the country was still hit by an R2.2bn
Personal Protective Equipment scandal and top leaders have yet to be arrested. This has led to a fu”ther drop in public and
investor confidence, resistance to the NHI and setbacks in the economic reform plans. Although there’s pockets of excellence in
dealing with corruption by SIU, AGSA and SARS, these institutions have limited mandates hence despite their success stories the
country is still experiencing big episodes of corruption.
SCENARIOS FLAGS SUCCESS STORIES
COUNTRY FLAGS C F
OWNING OUR FUTURE EOH – The Chief Executive Officer
1. LEADERSHIP (CEO) dealt decisively with corruption
2. INSTITUTIONAL CAPACITY in the company when it was hit with a
R120m fine by the Johannesburg Stock
3. POLITICS Exchange. The CEO made changes to
4. SOCIAL COHESION the leadership structure, re-introduced
business ethics, criminally prosecuted
5. NATIONAL POLICY those found guilty of corruption. In
addition, involved the Assets Forfeiture
6. SERVICE DELIVERY Unit at the National prosecuting Authority
7. INEQUALITY in the corruption cases and stepped-up
professional resources in the company’s
8. ECONOMY Risk Management, Internal Audit and
PERPETUAL FAKE IT UNTIL WE 9. GLOBAL TRENDS Forensics Departments.
HANGOVER MAKE IT, OR NOT
10. CLIMATE
C – CURRENT (2020/21) F – FUTURE (2030)
“There are encouraging signs that the Hawks and the NPA – and indeed all other agencies who should be involved (the SIU, SARS, the Office
of the Public Protector and the Office of the Auditor-General come to mind) – are finally displaying some appetite for the immense task
ahead. But it is beyond dispute that they – each and collectively – lack both the expertise and capacity to investigate and hold accountable a
meaningful number of the many persons criminally involved in this desperately sad chapter of our young democracy.” SOURCE: Ian Donovan
– Daily Maverick article – 29 October 2020
TOP 5 CHALLENGES TO ACHIEVING TOP 5 RISK TREATMENT OPTIONS AND
TARGETS OPPORTUNITIES

1. Lack of internal controls, absence of punitive 1. Consider creative solutions to speed up the process to bring
offender to “book”, e.g. Heed Professor Thuli Madonsela’s call
consequences for corrupt officials, and high-profile to explore the possibility of a well-crafted amnesty overseen by a
leaders in both government and corporates.
suitably resourced agency.
2. Re-introduce ethics code of conducts led from the top in all
2. Low levels of ethics in all sectors of the economy.
organisations both public and private.
3. Appoint accredited, suitably qualified experts in positions that
3. Lack of expertise and capacity in crime fighting units, judicial
system as well as assurance functions in corporates. deal with assurance services, specifically Risk Management and
Forensic Services.
4. Allocate specific budgets to step up efforts in all units tasked with
4. Budget cuts in all departments fighting crime.
fighting corruption – Chapter Nine Institutions
5. Lack of independently run “hotlines” and whistle-blowers 5. Outsource “hotlines” to independent service providers supported
protection programs leaving whistle-blowers under constant by good governance through the Social and Ethics Committee
threats

FACTS AND FIGURES
• The 2020 ACFE Global Study on Occupational Fraud Indicates that perpetrators of fraud often get away with minimal punishment. The reports
indicate that 66% of perpetrators only had their contracts being terminated as a punitive measure. For the remaining fraud cases, either the
perpetrator is permitted to resign and at the least remains within the institutions without any form of punishment.
• The study also indicates that in the past ten years anti-fraud controls have only increased by 13% at the most. The following table shows the
increase in controls in the past ten years:
CONTROL 2010 2020 INCREASE

Hotline 51% 64% 13%
Anti-Fraud Policy 43% 56% 13%
Fraud Training for Staff 44% 55% 11%
Fraud Training for Managers/Executives 46% 55% 9%
• AGSA FIRST REPORT ON THE FINANCIAL MANAGEMENT OF GOVERNMENT’S Covid-19 INITIATIVES
• At the time of the release of the special report on Covid-19 the AGSA was still in the process of auditing the supply chain management processes
for other provinces, the audit outcomes so far indicated the following:
• Deviation from the procurement process. As a result of the non-compliance, there is a possible irregular expenditure impact of R21 937 805.
• Quotations received from two related suppliers, one of which was awarded the contract. These suppliers have the same addresses and are
owned by the same person, which shows possible cover quoting.
Source: First special report on the financial management of government’s Covid-19 initiatives- AGSA 2020, Tax Fraudsters Sentenced in High Court – SARS 21 February 2020, The
Report to the Nations: the ACFE’s 11th study on the costs and effects of occupational fraud- ACFE 2020, Audit Perspectives: Auditor General Responding in times of crisis - AGSA 2020
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