Greed Triggers Fraud And Corruption

ABSTRACT

Purpose – Greed triggers fraud and corruption which is one of the biggest problems we are facing in our country as its increasing enormously rather than decreasing. The purpose of this study is to assess the different types of fraud and corruption and because it is such a broad topic we will focus on a life situation which highlights how greed plays a huge role in the creation of fraud and corruption.

Design/ Methodology/ approach – in depth interview are conducted with a senior quantity surveyor who has been working for a contracting company for the past six years and has allowed me to be part of the investigation process that is being conducted. The reason behind the investigation is to find out how come they owe such a great amount of money for tax but money had been deducted from their salaries since they started working and reasons of being unfairly dismissed.

Findings – The employer of the contracting company seems to be deducting money from his employee’s salaries but not paying the tax company without the knowledge of his employees using it for his own private use. Additional information was found that all his workers haven’t been registered under the department of labour and the company has been running for a number of years now and unfair dismissal was practised in this company.

Originality/ Value – The final results of this paper will help us understand and beware that there are all kinds of corruption in the industry. Ms Anonyms will hand over all her payments slips to the investigation officers to prove that she has been working and paying for her tax over the past years while working and to also open a case of unfair dismissal and take it to the Commission for Conciliation Meditation and Arbitration (CCMA).

TERMS OF REFERENCE

PROPBLEM DESCRIPTION

Fraud and corruption play a big role in the construction industry which this results in the hindering of development in our country and the country not moving forward.

AIM

The Aim of the research is to bring the matter of fraud and corruption to attention of the reader. To detect risks in the industry and to provide users with relevant anti- corruption resources.

OBJECTIVES

To find out what triggers fraud and corruption

To what extent is an individual willing to scoop low to get what they want and not be caught

How corruption affects the Construction industry

How it hinders development.

PROPOSAL

Chapter one

1.1 Introduction

Greed is a critical issue affecting the construction industry and country as a whole as it leads to fraud and corruption which plays a huge part on the hindering of development in our country.

Chapter 2

2.1 Greed

The selfishness of an individual of wanting more and not being satisfied of what they already have.

2.2 Fraud

A criminal offence done intentionally because of personal motives which the individual will gain that could affect another individual.

Corruption

Chapter three

3.1 Case study

Ms Anonymous finds herself in the middle of a fraud and corruption situation that she was not aware off.

3.2 Tax invasion

CONTENT PAGE

PGE NO.

Acknwoledgements

Abstract

Terms of reference

CHAPTER 1

INTRODUCTION

Fraud and Corruption are broad and complex issues but their roots are embedded in a countries social or cultural history, Political and economic development and it includes both these committed by the government, employers, employees, management staff, individuals or a group of people who have come together with one agenda only and these committed is motivated by Greed.

Greed steers and individual into fraud and corruption which also triggers the power of the mind, when a person starts procrastinating about the benefits and what one shall gain they begin to start plotting ways in making these thoughts into reality and once these thoughts become reality and the outcome is greater than expected they start abusing the situation into their own advantage.

The construction industry sector is recognised as carrying the highest risk of corruption, the rate of corruption and fraud in the industry is increasing enormously rather than decreasing which is slowing down the economy and surprisingly it has become an ordinary and normal habit that is being practised. It is almost like a swimming pool which everybody now wants to jump in and swim in the deep end not bearing in mind that not everybody can swim.

CHAPTER 2

HISTORY

GREED

Greed is that extreme desire to attain or posses more than what one has such as material wealth which is usually more than what one needs and deserves. It also involves using being wealthy to gain power over others also denying others of wealth and power.

It is basically being selfish, thinking of one’s self while at the same-time affecting other people negative way. For example if a building inspector would accept a bribe from a contractor to approve and state that all work done is of good quality and condition while that is not true than that is an act of being greedy because looking at the situation the only people gaining here are the building inspector and the contractor while in the long it will negatively affect the community as a whole or the people who will be in use of the premises that is being built.

FRAUD

In the country we live in fraud is a criminal act that would disadvantage an individual or a group of people and it is also a civil law violation. Fraud is done intentionally which involves dishonesty for personal gain or damage to other individuals. Fraud can be categorized into many forms for example theft and embezzlement.

In a case of fraud you would have for example a person such an Alien (not belonging in the industry) who knows nothing about the construction and the whole background of it having certificates qualifying him in erecting projects in a case that he doesn’t even how foundation is done.

CORRUPTION

Corruption in any case is the act of being dishonest and abusing power or the person’s position. Corruption can happen anywhere and is usually committed by an individual or a group of people such as officials or private persons. Corruption comes in many forms such as bribery, nepotism, cheating, vote rigging and extortion.

An example of corruption would be paying off kickbacks to get multi million rand contracts for dubious reasons, having to regularly donating huge sums of money to maybe political parties or buy expensive gifts such as cars worth millions rands in-order to get something in return.

“Corruption and fraud come in with greed because they are actions stem from the lack of ethics and undermine human institution and human relations.”

CHAPTER 3

CASE STUDY

Ms Anonymous and Contracting Company.

Ms Anonymous has been working for a contracting company for the past 3 years as a senior quantity surveyor for this company. She did more than just her employed position where she also worked in the civil side of the work and any other work that needed attention she would be gladly to assist in other words she was more of an asset to the company and they had mentioned that to her as well.

The problem started when Ms Anonymous received a letter that she needed to go sort out her tax returns. When she went to pay a visit at the tax company (SARS). S he was informed that she owes a lot of money and was asked why she hasn’t been paying for her tax? She was shocked and told them that she has been paying for her tax ever since she started working for her recent company the past three years. They told her to request and RIP5 form from her employer and also to keep all her pay slips as proof of payments for tax when needed to check her account and also that her company was one of the companies that were chosen for audits in 2012 so they would be an investigation with regards to her matter of not paying tax and would take things from there.

Audits where later on done of the company and it revealed that they owe a great deal amount of money and that they have not been paying whatsoever. They told Ms Anonymous to bring all evidence as proof that money has been deducted from her account for tax and they had promised that no information regarding with her account would he linked to the owners of the company and had assured her that she did nothing wrong as they had called in her to query her about her tax number. Investigations continued as the tax investigators kept coming into the office to do Company Audits and since they had no financial and bank statements and how much is being charged from the workers it pin pointed that they have been not paying such as VAT and PAYE.

Things started to be little offish at work where they were all panicking and looking for fingers to point as they were not aware how and what had led SARS to come and audit the company with realising that SARS had chosen them themselves than rumour went out the Ms Anonymous had went to SARS. Later on they made false pay slips saying as he was paid more than she was being paid so that it will show as if she was the one who was not paying Tax but then Ms Anonymousness Payslips had proven all of that wrong.

A month later Ms Anonymous was called into the Bosses office and was told that due to financial constraints they will have let her go because they will not be able to afford and they will be giving her 3 months to look for her job and are willing to give her good recommendation.

TAXATION

The importance of paying tax

Nobody wants to pay tax which is highly understandable but that money is the only money raised through tax that the government relies on to produce public revenue to pay for public expenses that provide goods and services to the public. Without tax and people not paying it becomes difficult for the government to try meeting the basic needs of the country. Both the state and the local governments are imposed in collecting tax.

There are different types of taxes that need to be paid which are:

Income taxes

Payroll taxes

Sales taxes

Excise taxes

Wealth taxes

“Article I, Section 8, says: “The Congress shall have Power to lie

And collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the country”

Benefits and uses for tax

As mentioned above that tax pays for goods and services for the public such as:

Education

Public housing

Public welfare such as security

Unemployment benefits

Highways and public transportation

Health

Police

Fire protection

Tax also includes daily operating expenses of the government and also salaries of the government employees and also interest on debt owed by the government. It is highly important as the benefits of tax keep the country in place and running and also reaching out to the people who are unable to afford from themselves. The roads we walk and drive in everyday is because of the tax that is being paid, the public clinics and hospitals that help our people to get treatment and be attended to when they cannot afford when they are sick is because of tax and the list goes on but all in all it is beneficial for the country for tax to being paid.

Responsibilities of income tax payers

The income tax system is a voluntary act and compliance but it does not mean that tax payers can only pay tax when they want to or not pay tax when they also don’t want to. In other words everybody who is working must pay tax and in order foe people to comply with the legal responsibilities the tax law must be fair and firm.

When looking at being fair, the government must be fair enough as to the people paying tax wont resent him as the government and the leader of the country and also resent paying tax at the end of the day and making sure that everybody complies. When looking at being firm, people who don’t comply with this law and try to duck it must be punished and made seen that they are committing a criminal offence and should pay dearly for such action.

Penalties for Tax Fraud

In most cases people who don’t pay tax are due to carelessness or negligence or usually done intentionally and find ways to avoid paying tax which is seen as tax fraud and these people are faced with tax interest or tax penalties. Tax fraud is when people who avoid paying tax and are not honest to the government about their monthly/annually incomes so they can be taxed fairly with regards to how much they earn and they lie in-order to pay little tax which becomes unfair to the government and all other tax payers.

Tax fraud is a crime and people who commit such crime face high consequences close to about 75 percent financial penalties. There is no way of ducking and hiding from paying taxes because eventually everybody is caught just that it might not be now but when it comes to fraud and corruption someone always slacks up and leaves foot prints.

LABOUR RELATIONS ACT (LRA)

The labour relations act is the relationship between people who work and those who they work for. The labour relations act was reshaped and implemented to create a good and working-full environment in the workplace. To give an employer and a employee to work under good and fair principles knowing their rights and limitations and which lines not to cross. To protect the employee against the employer and to also protect the employer against the employee but in most cases employees are opening cases against their employers. it is hoped that democracy in the workplace will bring industrial stability, economic growth, and labour peace.

Dismissals of the Labour relations act

Chapter VIII of the LRA concerns unfair dismissals. Section 185 records that every employee has the right not to be unfairly dismissed. The term “dismissal” is examined in the section 186 and includes:

A termination effected by an employee with or without notice.

An employer’s failure to renew a fixed term contract when an employee has a reasonable expectation

Refusal of an employer to allow an employee to return to work after maternity leave.

Retrenchment

When retrenchment is introduced it is usually when a company is facing some financial difficulties and is done for the followings reasons, economic, structural or technical reasons and before retrenchment takes place a proper procedure needs to be taken in-order to allow for retrenctment which is as follows:

Consultation

Immediately when the employer has no other options but to apply retrenchment, he has to inform his employees buy holding up a mass meeting where everybody is present or he could hold individual meetings with the individuals who will be involved in the retrenchment.

Employees are allowed to interact with the employer and also suggest other alternative ways which could be looked into such as reducing working hours and also workings days, the appropriate method to be used for the people are to be dismissed. Minutes can be taken in this case as it would help for misunderstood situations and to protect both the employer and employees.

When consultation is taking place members of the trade unions can be present to protect their workers and all the commission for conciliation, Mediation and Arbitration (CCMA) can also be present to intervene in this matter.

Disclosing of information in writing

When complementing retrenchment the organisation or the employer should issue letters to the employees that will be affected because of retrenchment. The information should inform the employees of the pending and the dates of retrenchment, reasons why they will be intiating retrenchment, the servenrane pay that is proposed, the assistance of the employer with regards with interviews and assisting them in getting new employment if possible.

Should there be any misunderstanding or any disputes that could take place than the employer shall refer to the written information to clarify any mis-understandingand these disputes could be handled by the labour court or the Conciliation, Mediation and Arbitration (CCMA).

Opportunity for feedback

The employer should give employees the opportunity to give feedback with the proposed retrenchment that will take place, give them a chance to make presentations and whatever is said and presented must be taken inot consideration by the employer and try to negotiate as so all paryies are happy.

The last in 1st out rule should be applied when dealing with retrenchment as you can’t compare a person who has been working for a company for the past 3 years over a person who has been around the company for 2months. If the company is going through financial constraints and they wish to let go a few staff than they should consider the last recently employed staff.

CHAPTER 4

CHAPTER 5

Data collection

With the information gathered with regards to Miss Anonymouses case we can draw up the following checklist:

The company has been deducting tax from her salary

She received a monthly income

She enjoyed annual and sick leave, UIF and PAYE benefits

She has been working for the company for the past 3 years

She signed an employment contract of reinstatement in September 2009

There is no proof of her being registered by her employer under the Labour court

Data analysis

With the gathered information it shows that Miss Anonymouses was a full employee of the company which also makes her fall under the people who should be paying tax to the government every-month. Having a look at her payslip it clearly shows that money has been deducted for tax from her payslip and with her knowledge she has been paying for tax. Additional information has been found that she was has not been registered under the labour court meaning she can’t be taxed as they may not be aware of how much she gets paid which is would make it hard for the tax man to tax her properly. The company is at fault for using moneyof the employees for their own personal use and without their knowledge and this sot of behaviour does fall under fraud and corruption and is a crime.

She has been working for the company for over the past three years so if the company was going through any sort of financial problems and they saw using the retrenchment system as part of covering costs than they did not follow the proper procedures of dismissal, she was not even consulted properly or given a chance to discuss the matter and negotiate or think of other alternative ways to avoid such dismissal.

Re-solutions, suggestions

When referring to the case study, the best possible steps that could be taken here is that Ms Anonymous keeps all proof of her payments that she can represent to SARS, write each and every single thing said to her and if they is anything asked or told to ask for it in writing and signed for because in the country we live in anything is possible and to make life easy is having all proof and evidence just to be on the safe side.

With regards to unfair dismissal, she should take the matter to the CCMA and report the act of unfair dismissal because no proper procedures where taken so it is either they will have to compensate her even more or giver her, her job back if she is willing to take it back. Each and every employee has a right to be treated fairly in the working environment and legal action can be taken in situations like this.

CHAPTER 6

CONCLUSIONS

Fraud and corruption is everywhere and is triggered by greed of an individual and it reduces economic growth, quality of life and undermines government creditability and reduces effectiveness. The fight against them should be presented in a short period of time in order to fight corruption. Every federal department and agency should work together continuously. Audit and investigation s could find any corruption or fraud cases, but the most important thing is to define how to prevent and detect them at the earliest stage possible.