CIPC hijackings:  Action needed to reassure South Africans that the companies they register are safe

In reply to a Democratic Alliance (DA) parliamentary question, the Minister of Trade and Industry, Rob Davies, today indicated that 10 companies have been "hijacked" at the Companies and Intellectual Property Commission (CIPC) since August this year. I will write to the Commissioner of the CIPC, Ms Astrid Ludin, to try to determine what steps are being taken to correct the problem and to identify any individuals at the CIPC who may have facilitated these hijackings.

During an oversight visit in June this year, Ms Ludin gave the Portfolio Committee her assurance that the necessary structures were in place to stop company hijackings from happening again. These recent incidents show that the situation is not under control yet.

Company hijackings occur when the list of directors for a company is fraudulently changed. The new "directors" can use their false titles to steal money from the company, from SARS or from financial institutions. It is only possible to hijack a company with the help of a member of the CIPC staff, or when the CIPC fails to do its due diligence to authenticate changes in directorships.

So far, only one of the ten cases has been resolved. The Minister says that the rest are under investigation. It is highly unlikely that ten company hijackings could have taken place at the CIPC without facilitation by one or more officials, yet no official has been suspended, and only one of the cases has been resolved.

Minister Davies' interventions earlier this year have been partially successful in improving the processing capacity and responsiveness of the CIPC, but more needs to be done to stop company hijackings in particular, to reassure South Africans that the companies they register are safe.

Statement issued by Tim Harris MP, DA Shadow Minister of Trade and Industry, November 30 2011

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