An evaluation of corporate fraud at the Small Enterprise Finance Agency : a South African perspective

Abstract

A state of unemployment links with human rights at some point in life. Some human rights can only be met when there is an employed breadwinner in the family. Unemployment can also be a crime generator. The South African government noted this challenge and developed the National Development Plan 2030 to curb unemployment growth through the establishment of State-Owned Companies such as the Small Enterprise Financial Agency (SEFA) to help create jobs and prevent crime motivated by unemployment. This was meant to encourage a specific group of people who are self-employed and with an interest in job creation by establishing a small business through financial assistance. However, criminals also observed such opportunities. Financial institutions such as SEFA are likely to be a target of crime, which goes against their mandate to create jobs. The South African government therefore created laws to assist in regulatory compliance to minimise and combat corporate fraud. The aim of this research was to evaluate corporate fraud at SEFA in South Africa. The assessment was guided by the following three main research questions – What does corporate fraud entail in the SEFA direct lending product?, What are the traits and Modus Operandi of corporate fraud targeted at SEFA direct lending? and What are the best and doable practices available to mitigate corporate fraud at SEFA direct lending? This study adopted a mixed method approach. The sample consisted of SEFA staff dealing with the direct lending product. The beneficiaries of this research include potential victims of corporate fraud, such as SEFA; entrepreneurs; Small, Medium and Micro Enterprises; the South African Criminal Justice System entities such as the South African Police Service, the courts and the correctional services, regulatory authorities; and the South African government. The findings make a valuable contribution as a practical, new framework which could be used to speed up the economic growth process through job creation without the extreme threat of corporate fraud. This would be possible if the South African historical factors, demographics, and acknowledgement of new talent for job creation are considered for economic growth and the prevention of corporate fraud.