WHITE COLLAR CR IME AND FORENSIC INVEST IGAT IONS

F IGHT ING WHITE COLLAR CR IME

IntroductIonSouth Africa experiences one of the highest incidences of white collar crime worldwide.

In order to meet the growing risks and challenges posed by white collar crime and the

serious reputational damage which can be suffered by organisations as a consequence

thereof, Nortons Inc. has been bolstering and expanding the scope of its white collar crime

and forensic services to include forensic audit services, as well as investigative services.

We believe that we are one of the only law firms in South Africa, which is able to offer

in-house forensic audit services as part of its white collar crime unit, as well as ancillary

services which include polygraph tests and voice stress test analysis as part of our broader

forensic investigative offering.

Nortons Inc. is the sole South African member of FraudNet, a specialised network of legal

counsel for transnational asset location and recovery, with 69 members in 53 countries,

giving it a global reach. FraudNet is organised and operates under the auspices of the

Commercial Crime Services of the International Chamber of Commerce.

Our AreAS OF FOCuS INClude:

• Anti-Fraud

• Corporate Compliance

• dispute Services

• Fraud Investigations (including polygraphs, etc)

• Forensic Audit Services

• Training

ForensIc legal

servIces

Organisations which experience white collar

crime in the form of asset misappropriation,

procurement fraud, financial statement

fraud and the like have traditionally

turned to their auditors or to so-called

independent forensic firms for assistance

in these cases. Historically firms have

not made proper use of their external

legal advisers for purposes of uncovering

fraud or for early detection of illegal

activities.

One of the principal advantages of retaining

law firms for purposes of detecting

and subsequently seeking to prosecute

fraudulent and illegal conduct, is that the

investigative process and work carried out

by the law firm is covered by legal privilege,

whereas similar work performed by audit

firms or forensic firms (which are not law

firms) are unlikely to retain legal privilege

and, therefore, is subject to discovery in

any subsequent litigation related to the

fraud or illegal behavior in issue.

Cases involving white collar crime and other

illegal conduct are often extremely sensitive

given the reputational risks and profile

associated with such matters and, accordingly,

it is often critical to ensure that appropriate

safeguards in respect of legal privilege and

confidentiality can be maintained.

In our experience, lawyers are also better

equipped to interview and cross-examine

suspects and relevant witnesses and

related parties in order to determine the

full extent of any potential illegal conduct.

Auditors are not generally well-equipped

for this task other than for purposes of

establishing whether financial entries have

been fraudulently or incorrectly made.

In our view, an optimal result can be

achieved when one combines legal and

audit forensic skills under one roof in the

course of a forensic investigation.

This ensures that legal privilege is

maintained over the entire process and

that the benefit of the complementary skill

sets, both legal and audit, are maximised

in the interests of an efficient resolution of

the case at hand.

FORENSIC AUD IT TEAM

Internal controls

analysIs

InvestI- gatIon

InspectIon

red flag

fraud IndIcators

audIt ForensIc servIces

Nortons Inc has its own team of forensic

auditors who work under the supervision of

the legal team in forensic investigations

with a view to detecting instances of asset

misappropriation, procurement fraud, bribery

and corruption, financial statement fraud,

money-laundering and tax fraud. Our team

of forensic auditors has already demon-

strated their considerable skills in a number

of recent matters where extensive instances

of asset misappropriation, procurement

fraud, financial statement fraud and money

laundering have been detected.

As a result of the fact that our auditors

work hand-in-hand with our legal team,

we believe that the reports generated for

our clients are concise, easy to understand

and can subsequently be used in any

criminal prosecutions which are initiated

on completion of the forensic investigation.

Our FOreNSIC AudIT TeAm prOvIdeS

THe FOllOWINg ServICeS:

• Implementation of internal controls and

training on the application thereof;

• review of internal controls and identifi-

cation of areas of potential weaknesses

– “red flagging”;

• review of policies and procedures and

reporting on the applicability of current

policies and procedures as well as advice

on changes required to minimise potential

risk;

• Identification of fraud indicators and potential

areas of fraud through the following:

- examination of financial documents;

- review of financial statements;

- analysis of financial data;

- investigation of transactions and

cash flow movements; and

- inspection of ledger transactions.

• review of claims, costs, etc. and identifi-

cation of areas of potential savings;

• Training on the application of various

accounting and reporting principles; and

• Training on basic principles of data analysis.

INVEST IGAT IVE SERV ICES

InvestIgatIve and ancIllary

servIces • polygraph testing and voice stress tests:

used for purposes of early identification

of suspects and to corroborate initial

evidential findings;

• surveillance and counter surveillance:

which includes monitoring of stock and

other company assets;

• lifestyle audits: this is also referred to

as intelligence based litigation and is

useful in determining whether a suspect

is living beyond his/her means and what

the prospects are of a successful recovery

of misappropriated funds or assets;

• system audits: this involves the use

of processes to identify system weak-

nesses and ensure that procedures are

in place or are implemented in order to

actively prevent theft, fraud and other

consequential losses;

• preparation of data charts: these are

primarily used in order to link suspects

in complex matters using their communi-

cations or documenting process flow; and

• VIP protection: in the event that risks to

persons or assets are identified.

The Nortons Inc forensic team provides a number of investigative and ancillary services

which include the following:

ECONOMIC CRIME IN SA

FRAUD

69%

ECONOMIC CRIME IN SA

69%

complIance and traInIng

A recent survey1 has shown that 69% of

South African respondents (compared to

37% of global respondents) indicated that

they had been subjected to some form of

economic crime in the 24 months preceding

the survey and that economic crime is on

the increase. The survey indicates that

this is particularly so in relation to bribery

and corruption which is the fastest growing

category of economic crime in South Africa.

Other forms of economic crime which

are particularly prevalent in South Africa

are asset misappropriation, procurement

fraud, human resources fraud and financial

statement fraud. In relation to the last

three categories of economic crime, South

Africa experiences a significantly higher

incidence of these types of fraud than is

the case globally.

disturbingly, the survey indicates that

there has been a significant shift in the

perpetrator profile in South Africa with

senior management becoming the main

perpetrator of economic crimes committed

by insiders. Accordingly, effective compliance

and training programmes become the

best method of preventing or detecting

economic crime.

Nortons Inc conducts reviews of clients’

compliance programmes with a view to

identifying and addressing risk areas,

providing training where necessary and

providing advice on internal processes,

policies and procedures including training

and employee self-certification.

% OF reSpONdeNTS WHO HAd experIeNCed eCONOmIC CrIme

SOuTH AFrICA glOBAl

100

50

0

69

37

% OF reSpONdeNTS By SeCTOr THAT repOrTed experIeNCINg eCONOmIC CrIme

ASSeT mISApprOprIATION

90 80 70 60 50 40 30 20 10

0

27

52

29

59

7769

15

42

prOCuremeNT FrAud

BrIBery & COrrupTION

HumAN reSOurCeS FrAud

SOuTH AFrICA

glOBAl

1. PwC 2014 Global Economic Crime Survey

WHITE COLLAR CR IME AND FORENSIC INVEST IGAT IONS

accolades• White Collar Crime law Firm of the year

2014 (ACQ global Awards).

• White Collar Crime law Firm of the year in South Africa 2014 (Corporate INTl magazine global Awards)

• Two of our partners are listed in the International Who’s Who of Asset recovery lawyers contained in The International Who’s Who of Business lawyers 2014.

• White Collar Crime law Firm of the year 2013 (ACQ global Awards)

• White Collar Crime law Firm of the year 2013 (lawyers World law Awards)

• White Collar Crime law Firm of the year in South Africa 2013 (Corporate INTl magazine legal Awards)

• White Collar Crime law Firm of the year in South African for 2013 (global law experts practice Area Awards)

Nortons Inc has consistently been voted one of the top white collar crime law firms in South Africa and has received the following accolades:

ANTHONy NOrTON | T: +27 (0) 11 666 7561 | C: +27 (0) 82 452 7336 | ANTHONy@NOrTONSINC.COm | NOrTONSINC.COm

JOHN OxeNHAm | T: +27 (0) 11 666 7566 | C: +27 (0) 83 233 0484 | JOHN@NOrTONSINC.COm