Companies should develop sophisticated strategies to counter the threat posed by business hijackers, according to Experian, the global information services company.
“Businesses are most vulnerable to hijack when they change their directors,” Glen Bals, senior executive, business information at Experian South Africa. “It is vital for firms to understand and monitor the commercial credit profiles of both suppliers and customers in order to mitigate this risk.”
He says large, well-known corporations are often the targets of hijackers.
Bals points out that companies are often content with the basic checks, which consider whether the company director has signed the appropriate documentation and whether the director in question is on file at the Companies and Intellectual Property Commission (CIPC, the old CIPRO).
“If the answers are in the affirmative, the application is approved. Yet it can happen that when the individual who has granted the application looks again, the hijacker has clandestinely resigned all the directors.”
Bals says while CIPC might have the necessary controls in place, such controls only go so far. “If you make the rules too strict companies cannot change any of their directors.” He acknowledges that in order to change its directors a company requires a board resolution, certified copies of all ID books, and other related criteria.
“Professional fraudsters are generally able to lay their hands on those documents and there’s no way you can expect the CIPC to pick it up.”
Bals recommends that businesses monitor the directors of the company in question in order to mitigate the risk of business hijack, an exercise that can be conducted by credit reference agencies, most of which undertake to furnish alerts when the directors of a defined company or companies change.
Experian, says Bals, issues email alerts to advise of board changes, noting that previously it conducted such monitoring exercises from a creditors’ point of view. “Now it’s becoming important for companies to do so for anti-fraud purposes. Ultimately, companies need to monitor business information to spot the first signs of trouble.”