Friday, 28 August 2009

CIPRO CEO interview

Moneyweb has published a interview conducted with Ferdi Myburg (who is credited for breaking the story) and Keith Sendwe, the CEO of CIPRO. You can listen and read it all through the link below, but here is a snippet:

KEITH SENDWE: Well, currently with the help of Mr Myburgh alerting the public to the fact that there is this - and we are very glad he did - we started a process a few months back trying to alert the public of fraud. And I think he's brought it to the fore. Now we really need to get on to this. We have instituted a task team that is looking at this whole process of looking at all the duplicate names or associate names that we have on our system. Let me take an example. During the process that we were running we discovered 2 800 duplicate names. Now, without going through a process of investigating, it was easy to say they are fraudulent. But if you look at it, it was simply CCs that converted to companies. So we have to go and look at each and every instance of this. Any company can go on our system and do a search to discover if there is anything wrong there.

KEITH SENDWE: Firstly, we've done the investigation. We've also, over the last couple of months, spoken to our staff. We've gone through a process of alerting them to the fact that we will take stringent and very tough action against them. But I think it is more important to realise that this sort of thing is not confined to South Africa....

KEITH SENDWE: I think as management, Alec, we would do everything in our power. You must remember, we are in a highly unionised environment. We have to follow due process. But the message is certainly out there and when I spoke to the DG last year, in fact in December, and I said to him look, this is the extent of the problem, he said we've got to go the whole way and just clean up. And one of the reasons I was brought in two-and-a-half years ago is to do this transformation and cleanup.

ALEC HOGG: You did make a statement today that a number of companies have incurred a considerable financial loss as a result of this fraud. What is the situation with those companies? Are they suing Cipro? 

KEITH SENDWE: Well, no company has come to us, and certainly from our side we'll engage with them in any discussion. But we don't think we are liable in any way in terms of the Companies Act.

ALEC HOGG: You don't think you are liable?


ALEC HOGG: So who's liable?

KEITH SENDWE: Well, we are all into this together. It is a process. Cipro does its part, the banks do their part, everyone does their part. Certainly from our side we've done everything on our side that we should have done to ensure that nothing has gone wrong.

Click here for the entire interview. 

It is quite incredible how blame is apportioned and nobody takes ultimate responsibility. It is true that these sorts of things happen in other countries (eg the ID scandal in the UK not long ago) but this is normally followed by a national outcry. Whilst Mr Sendwe should be commended for taking this head on in an interview he (and his bosses) have a very long way to go before credibility can be re-established at the national office, and that is a major problem for everyone interested in RSA's ability to attract investment. 

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