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CFOs are to blame for corruption – Angelo Agrizzi at the CFO Talks Debate

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Chief financial officers have been complicit in virtually all of the major corruption scandals that engulfed SA in the last decade – now it’s time to prosecute them and send the guilty to jail, said Sasha Monyamane, professor of governance and ethics at University of SA (Unisa), speaking at the CFO Talks Anti-Corruption debate in Sandton on Wednesday.

Angelo Agrizzi, former chief operating officer at Bosasa and whistleblower, at the CFO Talks Anti-Corruption debate in Sandton on Wednesday

The question before the delegates was: what role did CFOs play in SA’s corruption scandals and what needs to be done to stop it?

“The King Report (on corporate governance) gives us guidance, and the Institute of Directors trains people on the expected role of board members. Every organisation proclaiming themselves as having good governance should send their people for training,” said Monyamane.

Dr Kelvin Kemm, suspended chairman of the Nuclear Energy Company of SA (Necsa) says there are far too many political appointees in state-owned companies (SOCs): “Far too often we see ministers running the departments and SOCs. What’s the point of having a board if the minister has the power to override them?”

Nicolaas van Wyk, CEO of the SA Institute of Business Accountants (Saiba), said it may be worth considering a change in the Companies Act to delineate the legal obligations on CFOs. “Maybe it needs its own CFO Act,” he said.

No-one wakes up and decides to create a corrupt organisation,” said Angelo Agrizzi, former chief operating officer at Bosasa, and witness against Bosasa at the Zondo Commission of Inquiry into state capture. “There is a grooming process that takes place.”

Agrizzi says it starts with small gifts, then larger ones, until you are captured by the corrupt organisation and become part of the conspiracy of silence. “Then one day you are asked to drop off a parcel for someone, and God help you if you don’t.”

“Corruption was the business model”

Agrizzi pointed out that the system of graft at Bosasa was so endemic, staff turnover (out of 6,800 employees) was just 0,02%. Corruption was the business model, despite having an ethics and governance committee, and prayer meetings each morning at 8 am.

Andries van Tonder, former CFO at Bosasa turned whistleblower, said the absence of structure within an organisation allows corruption to take root. Bosasa CEO Gavin Watson boasted of a flat organisational structure, which was another way of saying it had little structure at all. “In any organisation you have to have a structure where people can fulfill various functions without interference,” said van Tonder.

Andries van Tonder, former CFO at Bosasa, and whistleblower

Agrizzi and van Tonder explained how as far back as 2012 they attempted to alert Bosasa’s bank, FNB, as well as the Independent Regulatory Board for Auditors (IRBA) and the company auditors to the corruption within the organisation – to no avail. They wanted the bank to place a cap of R5 million on any transaction through the banking system to stop cash bleeding out of the company.

“Protections for whistleblowers are non-existent. In fact, you get arrested (for blowing the whistle),” said Agrizzi. “How do you go about challenging CEOs who have captured the government?”

Van Tonder and Agrizzi say they were offered R60 million to stay silent, and have also received death threats in an attempt to stop them from going public with their evidence of corruption.

Under Mbeki corruption was manageable

Under former President Thabo Mbeki, corruption was at “manageable proportions”, said head of Corruption Watch, David Lewis. “Under (former President Jacob) Zuma it consumed the state. The Arms deal under Mbeki was a serious episode, but it was discreet. The State Capture project (under Zuma) involved the capture of the key decision-making structures of the state. State-owned enterprises (SOEs) were targeted because that’s where the money is.

”You had this dream team of Brian Molefe and Anoj Singh who came from Transnet to Eskom. The Zuma-Gupta syndicate was the best of the lot. Zuma had influence over the boards of SOEs and didn’t need to do anything else.”

But Zuma was only useful to the Guptas so long as he was president of the country, which meant the ANC itself had to be captured. This involved infiltrating local, provincial and national structures with bribable agents of corruption.

Prosecutions must happen if the country is to slow the progress of corruption through the organs of state and business, said Lewis. “Commissions of Inquiry are great, and new appointments to boards are great, but public trust won’t return unless there are prosecutions of individuals.”

The recent arrest of eThekwini mayor Zandile Gumede on charges of fraud, corruption and racketeering relating to a R208 million tender within the Durban Solid Waste was a good start, added Lewis.

“The best whistleblowers aren’t always angels. They may fear God or the National Prosecuting Authority (NPA), or that their co-conspirators may knife them so they decide they better knife them first.”

A former head of the Competition Tribunal, Lewis said he frequently dealt with cases of price fixing, with evidence of wrongdoing often coming from people who were part of the conspiracy.

“We need to review the appointment processes. It is very unusual for a president to have to appointment powers that our president has, but it is encouraging to see President Ramaphosa making use of a selection committee for the appointment of the new head of the NPA.

“Allowing ministers to make CEO and CFO appointments is a terrible idea. Also, having the state as a shareholder is a problem (when it comes to the appointment of key posts).”

Corruption is a business risk, said Monyamane. Many employees will listen to the boss before paying head to the ethics committee. Lorien Gamaroff, CEO of blockchain consulting firm Centbee, said CFOs need to familiarize themselves with blockchain technology and how it is being used around the world to authenticate transactions and eliminate fraud and corruption.

Corruption is the CFO’s fault, added Agrizzi: “You are the ones who control the purse strings.”

What is also needed to stamp out corruption is much stronger support from professional bodies such as Saiba and the SA Institute of Chartered Accountants (Saica).

Comment from Saiba

Nicolaas van Wyk of Saiba comments after the debate: I think what is clear is that we need a change to the Companies Act, or a dedicated CFO Act, which spells out the duties and obligations of the CFO. The CFO should be obliged to attend an ethics course once a year and must make a declaration any time he is aware of an attempted or successful bribe or corrupt transaction. Furthermore, if the CFO resigns, he or she must state the reasons for resigning. This is similar to the obligation placed on an accounting officer in the Close Corporations Act. Saiba will be formulating a more thorough response to this very important debate, with our suggestions on how we can start turning the tide on corruption.

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