By Alistair Anderson and Sanchia Temkin

Concerns were raised by political parties about poor and out-of-date controls at the Companies and Intellectual Property Registration Office (Cipro) and the ease with which the office had fallen victim to fraudsters.

A public hearing of Parliament’s portfolio committee for the Department of Trade and Industry was told that an inefficient Cipro was causing difficulties for companies.

This came in the wake of the conviction of Pakistan businessman Imran Abbas, who on Tuesday was sentenced to eight years in jail for his role in an organised crime syndicate, the Naqvi syndicate, which defrauded the South African Revenue Service (SARS) of R51 million in tax refunds.

Abbas took part in the syndicate by assuming a false identity and registering as a director of two existing companies, SBC International and Sun Microsystems.

He then opened bank accounts in their names to claim tax refunds from SARS.

In August a syndicate allegedly involving businessman Sandile Majali was found to have hijacked Kalahari Resources, a mining company, from Cipro’s database.

Elsabe Conradie, executive manager for customer services at Cipro, said the Naqvi syndicate committed the fraud while Cipro was still using its old software.

"That system dated as far back as 1984," Ms Conradie said.

When the Naqvi syndicate was uncovered by SARS, Cipro updated its systems last year to include customer verification.

However, Ms Conradie said the Kalahari Resources incident had been uncovered subsequently.

"This meant that more work needed to be done to Cipro’s system," she said.

The organisation added a password verification system, which means that no one can obtain access to anyone else’s account.

Meanwhile Cipro was under fire again on Tuesday.

The Democratic Alliance’s deputy spokesman on trade and industry, Jacques Smalle, called on Trade and Industry Minister Rob Davies to release the terms of a settlement reached in a court case between the department and Valor IT.

In terms of the new Companies Act, Cipro needed to establish certain electronic systems by April next year.

It had been working with Valor IT, which was going to develop a content management system for R153 million in fees.

There had, however, been irregularities in the tender process.

The Department of Trade and Industry had invalidated the deal. Valor IT had then taken the department to court as it wanted to finish the job.

Mr Smalle said that his party was concerned public funds would be involved in the process.

Earlier this week, Business Unity SA said the implementation of the Companies Act should be delayed by at least 12 months because of how important Cipro was to its use.

"A functional Cipro is essential to this act and the committee must take into consideration that Cipro is not yet ready," Business Unity SA representative Simi Sawusa told the portfolio committee for trade and industry.

SARS investigators said they were also working with Cipro investigators who would alert them of any suspicious transactions in the future.

SARS also said it had suffered R78 million in fraud from the Naqvi syndicate.

The revenue service expected to recover R26 million but had to write off a R51 million loss. So far, it had recovered R507 000.

Investigators said they confident that SARS would recover R20 million in assets which would be seized by the Asset Forfeiture Unit.

The other fraudsters who took part in the syndicate, including the leader Aliraza Naqvi, will appear in the Randburg Regional Court next March.

Investigators said two suspects were still in Pakistan.

Source: Business Day