JOHANNESBURG - Three more companies were hit by company hijackers late last year. Remag, Ntiro Technologies and News Café Rivonia all had their directors fraudulently resigned and replaced through the Companies and Intellectual Property Office (CIPRO) database. All three companies only became aware of the deregistration of their legitimate directors in the past few days.

Along with Coca-Cola Africa (see here) and MJS Trading this brings to five the companies which had directors fraudulently deregistered after CIPRO introduced new controls in October last year.

Two other cases of company hijacking from the middle of last year have also come to light, that of Johnson Crane Hire and Zader Investments SPV 2. This brings the number of confirmed cases of company hijacking in 2010 to forty (this number excludes the Kalahari Resources and Sithemba Chrome cases).

The earliest of these cases dates back to January and the latest to the end of November 2010. In almost all these cases the fraudsters moved to set up a bank account in the name of the company with the purpose (generally) of trying to steal tax refunds from the South African Revenue Services (SARS).

Thirty-nine out of forty of these cases can be linked to each other. What this implies is that a single criminal syndicate has been able to operate- repeatedly hijacking companies and trying to steal tax refunds - for almost an entire year.

It is not known how much money SARS has lost to this kind of fraud in 2010. In reply to a question in parliament Finance Minister Pravin Gordhan stated that since April 2009 SARS has suffered "an actual loss of R50 949 743.80 in diverted refunds." This figure is exactly the same ("R50 949 743.80") as Gordhan gave in response to a parliamentary reply in September 2009 to a question about losses sustained in a separate fraud carried out by the Naqvi syndicate in 2008.

Despite the obvious implausibility of exactly the same sum of money being lost to fraudsters in 2008 and 2010 this figure has nonetheless been presented as fact by Business Day, Business Report and ITWeb (on three different occasions.)

The problem of company hijacking was brought to prominence in September last year when eight false directors, including Sandy Majali, were fraudulently inserted onto the board of Kalahari Resources. In December the Mail & Guardian's annual cabinet report card commented that "Business would be happy if [Minister of Trade & Industry] Rob Davies could just get one job done -- fix Cipro, which manages company registrations in the country."

The Kalahari Resources hijacking was easy to solve as the culprits (several of whom suffered from severe mental illness) had inserted themselves as directors. While this case highlighted the problem it has tended to distract attention from the work of the much more sinister criminal enterprise.

The syndicate behind the 39 cases uses low level runners, often with stolen identities, to hijack companies on CIPRO and open bank accounts. The arrest of one of them, Itumeleng Malotsa, in October last year did not put a stop to the problem.

Indeed, what is striking about this matter is that the syndicate appears to be operating with a complete sense of impunity. Neither the publicity given to the problem, nor the ongoing SARS investigations, nor CIPRO's new controls, nor the arrest of a member have induced them to suspend their operations and lie low for a while.

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