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The many faces of white-collar crime

The many faces of white collar crime
The many faces of white-collar crime

Although only labelled in 1939, ‘white-collar’ crimes had been committed for centuries.

In his 1939 address to the American Sociological Association, sociologist Edwin Sutherland confidently defined white-collar crime as ‘a crime committed by a person of respectability and high social status in the course of their occupation’.

His reference was to white-collared shirts that were worn, according to strict etiquette, among office workers in the early and mid-20th century while blue-collar manual workers usually wore less expensive durable clothing. The term prevails to this day.

Sutherland’s concept soundly dispatched the prevailing notion that professional, educated individuals could do no wrong.

Historical examples of white-collar crime in South Africa

South Africa’s history abounds with fraudulent and exploitative practices by those in positions of power. In the 1870s as diamond mining gained momentum in Kimberley, the Diamond Fields’ Fraud saw dodgy characters ‘salting’ diamond mines, which involved planting diamonds in low-yield mines to deceive potential investors and buyers. This scam defrauded many hopeful investors who were lured into purchasing unproductive diamond mines based on false information.

South African history – past and present – is riddled with cases of white-collar crime. These include embezzlement, tax and fiscal fraud, bribery, corruption, securities fraud, misrepresentation, kickbacks and, more recently, cybercrime which further enables criminal activities.

The wheels of justice turn very slowly and sometimes not at all, hence the continued proliferation of white-collar crime.


A few familiar faces of white-collar crime in South Africa

  • State Capture – KPMG and the Guptas

The topic of state capture and corruption cannot be broached without mention of the notorious three Gupta brothers. The Guptas sought to launder money in South Africa under the noses of KPMG and did so very successfully – the association was so amiable that certain big cheeses at KPMG cracked an invitation to the OTT Gupta wedding at Sun City. How the mighty fell in 2017 when the euphemistic ‘oversights’ and ‘flaws’ were revealed – the big cheeses left the building.

The Guptas fled to Dubai to save their hides but this brought little respite to their activities, and efforts to extradite them to South Africa failed.

Procurement fraud and collusion are so endemic that we are under no illusion of what is meant by ‘facilitation fees’, ‘commissions’ or just plain ‘grease’ payments. Have we become inured to these practices – is our apathy tacit acceptance?

  • Ponzi schemes and crypto scams – ‘Kubus’, Kunene and MTI

Adriaan Nieuwoudt and Johan Steynberg left the dreams of hundreds of thousands of South Africans shattered as two of the biggest Ponzi schemes and scams collapsed.

Ponzi schemes and investment fraud frequently exploit vulnerable individuals and groups who may be left penniless.  An example is Adriaan Nieuwoudt’s notorious ‘Kubus’ scheme in the 1980s.

South African businessman Kenny Kunene was convicted in 1997 for running a Ponzi scheme involving 2,000 investors – a crime for which he spent six years in prison.

Johan Steynberg’s Mirror Trading International was irrevocably tarnished when it was found to have traded Ponzi-style in bitcoin. Mr Steynberg hurriedly departed SA in 2020 and currently finds himself between homes – a Brazilian prison or extradition to SA.

Few victims of these schemes ever received reparation.

  • Steinhoff

More recently, the murky Steinhoff scandal revealed wholesale lies and deception. The Steinhoff International financial fraud involved misrepresentation of intercompany loans. Steinhoff moved company money to fraudulently inflate its numbers. Steinhoff’s CEO Markus Jooste resigned in December 2017 while Steinhoff CFO Ben Le Grange resigned hot on Jooste’s heels in January 2018. The CFO’s hurried resignation was a major red flag for fraud as CFOs know ‘how the books have been cooked’, according to Stellenbosch Management Review.

While Marcus Jooste continues his sojourn in SA, the German government looks forward to welcoming him to face charges.

  • Fidentia
  1. J. Arthur Brown was convicted in 2014 for his mishandling of investments between 2002 and 2006 during which time 4bn went missing. He was released after serving seven years of a 15-year sentence. His crime? Mismanagement and misappropriation of funds earmarked for mineworkers’ widows and orphans…
  • Schabir Shaik and Jacob Zuma

Jacob Zuma’s former financial advisor, benefactor to the tune of R1.2m and, ultimately, convicted fraudster (and exam cheat), Shaik curried favour with the ex-president in return for ‘soft’ awarding of tenders.

He was released on medical parole, having served just over two years of his 15-year sentence.

Similarly, Jacob Zuma was also released on medical parole after having served a short period of his sentence. One can only marvel at the excellent medical care they have subsequently received. Lazarus-like, they are now both hale and hearty after having been released from prison for medical reasons. They were recently seen celebrating their good health at the swanky Durban restaurant, ‘Zuma’.   

South Africans cannot be blamed for doubting that the full extent of the deception will ever be unravelled. Worryingly, the self-serving greed of the individuals and groups of criminals in these organisations outweighed any personal qualms about perpetrating the fraud. Just how deep into the abyss of corruption have we cast our consciences?

Combatting white-collar crime in South Africa

South Africa’s history of white-collar crime – past and present – reveals an insidious erosion of integrity, a mass conscience failure and a precipitous plunge into a society where corruption is normalised. Our arsenal for fighting white-collar crime needs reinforcing.

Six crucial shopping list items are:

Strengthening legislation: Robust and fit-for-purpose laws. Loopholes for delays and obfuscation must be sealed.

Whistleblower protection: Safeguard these heroes. Their courage to raise red flags should be lauded, not punished.

Corporate compliance: Recognition for principled corporate culture and collaboration with corporates for the strengthening of laws.

International cooperation: Only when South Africa has clawed back the respect of the international community can we hope for international collaboration for extraditions and prosecutions.

Effective regulatory bodies: This is obvious. Why are the wolves in charge of the sheep?

Visible prosecutions: The longer the muddied waters of prosecutions continue to swirl in our courtrooms, the greater the hopelessness of South Africans. Let justice be seen to be done.

Our collective responsibility for combatting white-collar (and other) crime

No more ivory towers for Joe Public in SA. We’re collectively responsible for exposing wrongdoing. From seemingly minor incidents including our silence when hearing accounts of dodgy insurance claims, averting our eyes from dishonest office practices to witnessing blatant disregard for compliance, all make us complicit and culpable.

Take a stand so that when you’re looking for the face of a white-collar criminal, you’re not looking in a mirror.