approach to effectively tackle corporate crim e, former Corpcapital director Nic Frangos said yesterday.

In a speech at a "whistleblowers" training conference for the Scorpions, run by the US Secret Service, Frangos said that US businesswoman Martha Stewart would not have ended up behind bars in SA because "the JSE does not have a strong culture of enforcement".

He said the regulator, essentially the FSB, was there to ensure that directors acted according to the rules on trading on the JSE.

But, unlike the US Securities and Exchange Commission , "the fact is (SA's

regulators) just don't have the record when it comes to corporate deception".

Frangos said this was partly attributable to the level of sophistication of corporate crime, and partly to a lack of prosecuting staff and funding .

Equally, auditing firms failed to abide by their fiduciary duties in not always alerting shareholders when something was amiss.

Although Ernst & Young was criticised by advocate John Myburgh for failing shareholders by not blowing the whistle earlier in the Regal Bank case, and Deloitte faces a lawsuit from investors hurt in the LeisureNet collapse, the authorities have not yet acted against either firm.

FSB spokesman Russel Michaels disputed Frangos' view. "Things have improved.

The Genesis report last year showed we have cut down on market abuse and with the new Securities Services Bill set to come in, this will give us added teeth," he said.

Michaels said that if the JSE was so poorly regulated, foreign companies such as Barclays Bank would not be considering increasing their presence in SA.

Publisher: Business Day
Source: Business Day