Company hijackers face music

2010-10-23 09:46

The arrest of Sandile Majali and Stephen Khoza on criminal ­charges marks the first time a case involving alleged company hijacking has ended up in a criminal court.

The two, and six others, ­allegedly hijacked Kalahari ­Resources in August this year.

The case has also brought the spotlight back on the Companies and Intellectual Property ­Registration Office (Cipro).

In a first, Majali and his ­colleagues appeared in the commercial crimes court on Friday and were denied bail until Tuesday.

Legal practitioners attribute this first case of company ­hijacking to directors tiring of having their companies ­hijacked.

David Pinnock, commercial and corporate director at law firm Cliffe Dekker Hofmeyr, said: “This is a clear case of fraud and the ­media has been missing that, ­instead calling it a hijacking.”

Pinnock said a director can only be validly appointed according to the company’s articles of ­association and according to the Companies Act.

“Cipro itself is only a custodian of the information supplied by companies,” said Pinnock. Hence, when Cipro receives misleading information from people who do not have the necessary authority, that becomes a case of fraud.

According to Dave Loxton, a ­director at law firm Werksmans, of the many high-profile cases of ­hijackings during the past three years, those parties affected were either relieved to be restored or were ­foreigners who left the country ­in disgust.

Of the approximately 17 000 company record amendments that went through the Cipro systems every month until October, more than half have been fraudulent or changes that were not mandated by the companies themselves.

This, according to Cipro acting chief executive Lungile Dukwana, who said that after new controls were put in place in October, the number of requests had fallen to about 8 000 a month.

Cipro suspended its online ­system and asked companies to contact it before making any changes on the system.

In the wake of the alleged hijacking of mining company Kalahari ­Resources in August, Cipro introduced new security measures that give legitimate company representatives the ability to monitor their companies’ records online.

“Directors need to start taking an interest in their own ­companies,” said Dukwana.

Between 1999 and 2008, 1.8 million companies were ­registered on the Cipro system.

Firms currently in the suspended Cipro system could have their details amended online without the rightful owners’ knowledge.

Pinnock said the publicity around the case and the arrests were helping to send out a strong message to company hijackers that such activity was unacceptable. “It also sends a strong ­message to Cipro, and I hope that Cipro keeps considering ways to make companies’ information safe,” he said.

– Fin24.com

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