Bombshell from South Africa

August 16, 2018

For years, South Africa has produced so many surprises, good and bad, that many of us have come to expect the unexpected from the Rainbow Nation. But the lead story in last week’s Sunday Times (12.8.18) can only be described as a mind-blowing bombshell.

 

The article explains how state attorneys in South Africa repeatedly colluded with private lawyers to settle fraudulent medical negligence claims against the Department of Health.

 

“So what?” you might say. “This sort of thing happens everywhere, and there are always going to be a few bad apples in any organisation.”

 

Yes, but over the past few years these particular bad apples are alleged to have defrauded the SA taxpayer of more than R80 bn and possibly as much as R100 bn – equivalent to just over US $7 bn or £5.5 billion. That’s more than Nigeria’s infamous General Sani Abacha is thought to have stolen!

 

South Africa’s national health budget for 2018/9 is R205.4 bn.

 

The scam was apparently only uncovered when, by chance, the Minister of Health queried a proposed settlement of R70 million ($5 mln or £3.9 mln) for a supposedly botched circumcision on a man who has never been circumcised!

 

Consider that parts of SA’s desperately over-stretched public health system have repeatedly had to cope with severe medicine and staff shortages, and that earlier this year the Military Health Service had to be deployed to at least one major hospital, withdrawing only last week.

 

So how on earth can such a sizeable proportion of the health budget end up being spent on “successfully settling” so many bogus and wildly inflated negligence claims over a period of years without anyone noticing?

 

It would be easy – but wrong - to conclude that every public institution in SA, from the Auditor-General and the Financial Intelligence Unit to the Ministries of Justice and of Health, is riddled with unscrupulous thieves. Such wild and unfounded assumptions surface whenever some kleptomaniacal binge is exposed, and serve only to obscure the issues.

 

The root of the problem – the failure to detect this brazen scam earlier – must lie in the inadequacy of the fraud detection skills and procedures of all those honest and diligent officials, at every level, who would have been involved in inter alia overseeing government health spending, processing the paperwork for all the bogus claims, managing the crooked state attorneys, and monitoring such highly unusual deposits into the bank accounts of the supposedly impecunious claimants.

 

It is precisely why the African Financial & Economic Crimes Academy was established: to counter the growing skills deficit, across the public and private sectors, in the fight against financial and economic crime in Africa.

 

Only by greatly increasing both the depth and breadth of relevant practical skills and procedures can the region begin to confront the threat posed by increasingly sophisticated and high-value financial crimes.

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