South Africa cracks down on investment scams

The authorities have arrested and charged several people suspected of involvement in fraudulent schemes

Six suspected investment scammers, along with 25 call center agents, were arrested on Tuesday in Johannesburg during a major crackdown by South African police.

They have been charged with contravening the Financial Advisory and Intermediary Services Act. The suspects, aged between 38 and 61, were apprehended during a joint takedown operation involving local and international law enforcement agencies. The operation formed part of INTERPOL’s global Operation JACKAL, which targets online scams and transnational financial crimes.

INTERPOL’s Integrated Police Support Group (IPSG), based in Lyon, France, deployed a senior representative from its International Financial Crimes and Anti-Corruption Directorate to support the operation. Authorities said further investigations are ongoing, and additional charges or arrests may follow as the probe into the alleged fraudulent investment scheme continues.

In a similar case, the Directorate for Priority Crime Investigation (Hawks) arrested five suspects and four companies in connection with an alleged multimillion-rand fraud, theft and money-laundering scheme spanning the Eastern and Western Cape.

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According to the Hawks, the investigation centres on Pro Khaya, a construction company based in Gqeberha, which sought to expand its operations to Cape Town between 2015 and 2018.

Hawks spokesperson Lieutenant Colonel Avele Fumba said the company employed one of the accused, a qualified quantity surveyor, as a branch manager in Cape Town. ”The accused allegedly abused his position by establishing his own private company that offered the same services as the parent company,” Fumba said.

Investigators allege the suspect then identified and worked with subcontractors who colluded with him to generate fake paperwork.

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”Through meticulous investigation conducted by the Hawks, the accused strategically identified sub-contractors who colluded with him to facilitate fictitious invoices for payments to be paid by the parent company,” Fumba said.

The Hawks further allege that the subcontractors would then channel money back to the suspect’s private company. ”It was further alleged that the sub-contractors in turn would make payments back to his private company.” 

The estimated financial loss to Pro Khaya is about R12 million.

First published by IOL