VBS mega-fraud: Drafters of FSA Act, take a bow

By Alec Hogg

I've been immersed in the VBS story ahead of producing today's episode of Rational Perspective. Will expand at some length in the podcast on this crass act of industrial scale plunder. It's pretty clear that the key which unlocked this Ponzi scheme is the Financial Sector Regulation Act which came into effect on 1 April this year. The FSR Act is already proving to be a potent tool for law enforcement.

Documentation in the VBS report shows how the Act gave investigator Adv Terry Motau wide search and seizure powers – and the ability to hire the best in the business to help him analyse this information. Against this force, even though the miscreants were laced with KPMG-trained chartered accountants, they stood little chance.

With private sector experts like Basileus Consilium, FACTS Consulting, Crowe Forensics, other advocates and lawyers Werksmans on Motau's team, it must have felt like he was heading a well resourced commission of inquiry. The new Act's secret weapon, however, is Section 140 which encourages witnesses to 'fess up by guaranteeing whatever they disclose cannot be used against them in a criminal case.

The report shows how time and again key witnesses transformed from liars to whistleblowers after Section 140 was explained to them. Self preservation is a powerful motivator. Those who drafted this legislation clearly knew a great deal about the human psyche. And understood how there really is no honour among thieves.