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Corruption? Who’s robbing our prosperity?


Who are we as a country? What does our most “trusted” institution’s stand for? and Who are the biggest losers in all of this? These were the questions I try to answer to myself and still can’t.  After a week of:

  • a witness video going viral of “police men” violently and brutally high jacking a Chinese lady;
  • being stuck in gridlock traffic for hours on end, because of infrastructure failure,
  • questions of what is happening in the Police, over 17000 firearms going missing;
  • the three weeks of labour court fights regarding the suspension of the Head of our Elite Investigation Unit, the Hawks, Lt. Genl. Anwa Dramat, and receiving the decision in his favour;
  • the allegations of corruption and bribery against the South African Airways Catering Head, Bongi Sodlala;
  • then I am not even mentioning NkandlaGate and the GuptaGate issues and
  • do I need to mention it, the Eskom Infrastructure fiasco, affecting all 49+ million people (their previous slogan) in South Africa. Their website company Motto is “Powering your World”.

Crest Advisory Africa Position

Crest’s first Newsletter of 2015 indicated that Corporate Governance will be a priority in 2015 and going forward. The newsletter also indicated that corruption, unemployment and the fact that our economic growth rate is predicated not to exceed 2.5%. Further, our countries credit rating has been downgraded by Standard & Poor’s (S&P) and Moody’s.

The question is hard and in our faces: Who can we trust? Every day we are bombarded with news regarding these matters and we as Proudly South Africans, needs to answer to our international counterparts, friends and visitors, how do we still stay proud.

IRMSA Country Risk Report 2015

Top 10 SA RisksThis week, the Institute of Risk Managers of South Africa (IRMSA) has published the first South African, Country Specific Risk Report 2015. It is the first of its kind and Crest congratulate IRMSA for taking this initiative. The reports contents confirm the Crest position.

Not surprising, the result from the survey indicates that Corruption, Yes everything mentioned above, is the Number 1 Risk in South Africa. This is followed by Unemployment, Infrastructure and Political and Social Instability.

The examples mentioned were widely publicised during the last 7 days. This is placing everyone in the state of mind and asking the question, are we on the same route as our neighbouring country?

Will our inflation, which increased in the last quarter, be increased again, effectively making us poorer? With all the pressure on our economy, this will definitely negatively affects all of us.

Effective Risk Management: Really?

The Top 10 Risks is indicative of a decline in Corporate Governance. This is affecting the brand, the integrity and the trust we have in these brands. Can we still believe what they say about these matters? Are their Risk Management strategies and processes working? If Yes, then why are we where we are? What went wrong? Who cannot or will not make a decision?

If Yes, then there are big questions to ask regarding the Governance of these processes and the effectivity of the Risk Registers and the Prioritisation of these risks to reach the Countries Objectives. These are not companies / departments or institutions specific, they are carrying the Objectives of a Country on their shoulders.

I want to explain this. ISO 73:2009 defines risk as:

  • Effect of uncertainty on objectives.

This is very simple but in the same breath, very complex. For starters, Eskom is responsible for “Powering our World”, the South Africa Police Service (SAPS) is responsible to be trusted and Keeping our World Safe and Secure. Our national carrier, with all the trouble they are in, who flew dramatically and Proudly South Africa, over the Ellis Park rugby arena in 1995, are experiencing a nosedive with promises and no delivery.

Knock-On effect of the Top 4 Risks

The Top 4 risks is supposed to be indicative of our founding principles, our trust in our fantastic democracy, but because of the poor corporate governance, opens the barn door for Risk Number 5 (Organised Crime), Number 6 (Cyber Crime) and Number 10 (Data Fraud). These are opportunistic risks / crimes. It is interesting that 40% of the Top 10 Risks are crime.

The example our foundation principles are providing with the various high profile criminal cases broadcasted the past year, does not give any assurance in our Criminal System. Thus, the opportunity will continue to increase. The lack of economic growth will result in more challenges to the business status quo and theft, fraud and embezzlement will increase. Not a great futuristic view.

Fraud within Procurement environment

Crest Advisory Africa, and in particular, Nico Snyman as CEO, has been invited to the Smart Procurement World Conference 2015 to be held between the 3rd to 5th March 2015 to be held in the Western Cape. The Conference Topic is:

  • The Fraud clampdown–
    • dealing with internal interference,
    • external pressures and
    • ethical dilemmas

Who are the biggest Losers?

The heading of this newsletter is about: Who is robbing us from Prosperity?

This is a serious question and I hope that everyone who reads this will see his / her role in creating Prosperity of South Africa. If we continue as we are and ignore the bigger global consequential damage to our country, what kind of a legacy will we leave to be inherited?

The below 2.5% growth, will effectively result in companies closing their doors, thus creating bigger pressure on unemployment and it is inevitable, our unemployment (Top 10 Risk number 2) will steadily grow. Do we really want to see a 30% unemployment rate?

The Corruption (Top 10 Number 1), Organised crime (Top 10 Number 5), Cyber-attacks (Top 10 number 6) and Data Fraud (Top 10 Number 10) will have such a destabilising effect on business that questions will be asked, can  a business survive doing the same, or choosing to implement more technical solutions. This means, less people, thus, more unemployment, thus more opportunity for people to get involved in crime.

These are bad spiralling effects for all of us. But the biggest losers are the poor, the unemployed, and the guy standing at the traffic light, trying to make a living.

Bread Crum Approach

Yes, the solution to all of these issues and risks mentioned are strong Leadership. This is a huge cruise ship which needs to be turned around. How do one do this? None of us can sit back and think we are passengers on this ship, no we are the crew to make this ship great and to sail the unchartered seas. We are the pioneers, although our country is actually effectively now 20+ years young.

I mentioned the Bread Crum Approach. You would ask, what in the world is this? Well, each of us is a breadcrumb in this huge South African loaf of bread. If we do not do our best where we are and ensure that we live and breathe effective and efficient Corporate Governance, implement the policies and procedures and comply with the Rule of Law, then we cannot point fingers, because 3 fingers are pointing back at you and the fourth (usually your thumb) is showing up to the heavens, where God is the witness that you did not fulfil your breadcrumb role.

Prosperity has a specific Tax implication. The more we prosper, the more taxes the country collects to fulfil the countries objectives and create stability. Thus, let’s prosper, through better and improved Governance and create improved profitability.

Way forward

For further information on above or to set up a meeting to explore solutions regarding Corporate Governance, whether Risk-, Internal Audit, Forensic Audits, Training, Business Efficiency, or technological solutions, CONTACT US and leave an enquiry.