Director multi-representation in South Africa, which many believe poses a serious risk of fraud, is a question of trust, a credit bureau specialist believes.
André Stürmer, developer of the web-based connection detective solution Association Matrix, told HumanIPO one of the main reasons for the high number of directors holding positions on conflicting boards is the fact that “South African businesses are built very strongly through relationships”.
“It’s a trust relationship,” said Stürmer, who is also chief executive of credit bureau Inoxico. Citing statistics recently found through internal research, Stürmer revealed the directors of twenty of the country’s biggest companies sit on an average of 14 boards, posing a major risk for fraud or corruption through possible backhand deals.
Lack of young talent, insufficient education and lack of experience are also contributors to the problem, he said.
Association Matrix gives clients access to the connections of the employees in a company in order to raise awareness of potential conflict of interest matters.
Also used as a tool in forensic agencies, the online programme enables proactive investigation through which unexpected fraud cases can be avoided.
Stürmer explained: “We’re not finger pointers, but we are upholders of transparency”.
Despite local municipalities’ acknowledgement of the necessity for the exposure of connections, the National Treasury recently avoided committing to the usage of a tool such as Association Matrix.
According to the developer, the National Treasury believes this should be implemented on an organisational level.
However, companies seem to connect a stigma to exposing these positions rather than embracing the opportunity to be transparent and less prone to fraud, he said.
Stürmer explained how the data gathered had to be made “meaningful” as the commodity it represents is useless if not structured in providing more direct solutions to the relevant needs.
“One of the big things on corporate agendas right now is the conflict of interest risk and procurement force,” he said.
HumanIPO reported recently on Association Matrix’s plans to expand to overseas markets, including Europe, Middle East and Latin America.
