Fraud scheme at Blue Label – more details emerge

Blue Label Telecoms on Wednesday provided more insight into a fraud scheme it uncovered last year that led to the suspension of two senior executives.

TechCentral broke the news about the fraud last year: the publication reported in August 2021 that the group had suspended Alan Kodesh, the chairman of Ventury Group – the entity that houses various group businesses in the prepaid space, including Cigicell – as well as Warren Lampert, who was Cigicell’s financial director.

Blue Label declined to disclose details about the fraud scheme at the time. It has now disclosed more information to investors alongside its interim results for the six months to 30 November 2021, which were published on Wednesday, including that the scheme had been operating since 2015.

“The fraudulent transactions were performed primarily outside the course and scope of the subsidiary’s (Cigicell’s) immediate field of commercial dealings, whereby the perpetrators interposed themselves between intermediary companies and the subsidiary for their own benefit,” Blue Label said.

“In addition, certain transactions were identified evidencing theft of funds from the subsidiary and the fraudulent concealment thereof. Settlement agreements were signed with the perpetrators in late October 2021, in terms of which rights to all but a few assets of the perpetrators were signed over to the group.”

R315-million

“The group holds powers of attorney over these assets. As of 31 October 2021, the aggregate value of assets either realised by or signed over to the group as a result of the fraudulent scheme amounted to R315-million, which has been recognised as recoupment income.”

Blue Label has handed the matter over to law enforcement for possible criminal prosecution, said co-CEO Mark Levy.

Levy told TechCentral when it first reported the news of the fraud that Blue Label has “zero tolerance for this sort of behaviour”.

The matter was probed by Werksmans Attorneys, Crowe Forensics and Basileus Consilium Professional Services, also known as BCPS, a specialist in cyber forensics, TechCentral reported at the time.  — © 2022 NewsCentral Media