Consumer goods group Unilever is chasing nearly R16m from former employees 18 years after it discovered an elaborate fraudulent scheme run from the finance department at its head office in KwaZulu-Natal.
The Durban high court last week ruled that Meganathan Naidoo and businessman Sean Pather must pay Unilever R15.7m plus interest for fleecing the group in a scheme that went undetected for seven years.
Unilever owns brands such as Lifebouy, Domestos and Omo. Naidoo worked for Unilever for several years in the finance department. He and a colleague, Zenzele Mchunu, who worked as a fixed assets and financial accounts clerk, ran a fraudulent scheme for several years using the group’s vast fleet across the country.
According to a forensic investigation, the scheme cost Unilever R16.2m and at one point the men were raking in more than R500,000 a month.
Mchunu managed more than 35 vehicles used by Unilever sales representatives across SA.
Mchunu’s responsibilities included managing bank cards for the fleet. He received reports at the end of every month from WesBank, detailing expenses for each vehicle.
The group’s employees could use the cards only for motor vehicle expenses including petrol, oil, servicing, tyres and certain repairs for the vehicle allocated to them on production of the card. The service providers would claim amounts of such transactions from WesBank who would claim reimbursement from Unilever.
Roots of the scheme
It is in the management of the bank cards that Mchunu and Naidoo collaborated for seven years in stealing from their employer. At some point, Naidoo was Mchunu’s supervisor.
The roots of the scheme began in 1998 when Naidoo approached Mchunu and said he needed money and that they could service both their vehicles and use a WesBank card to do so.
This grew into a more elaborate scheme where the men would order new cards from WesBank under the pretence that the old card was damaged. On receipt of a new card, they would not destroy the old one but continue using it in co-operation with the merchants they were working with.
Whenever the group disposed of a vehicle, Mchunu would contact WesBank pretending the garage card had been lost and ask for a replacement. This too would be used to defraud the business.
When the scheme was uncovered in 2005, Mchunu made a full confession to Unilever and the police. He was slapped with 2,984 charges of fraud and pleaded guilty and was sentenced to 15 years’ imprisonment, six years of which were suspended.
He was released on parole in December 2009. The Asset Forfeiture Unit attached and confiscated his property, and his pension funds were forfeited to Unilever. In the present civil lawsuit against Naidoo, Mchunu testified on behalf of Unilever.
He told the court that from an accounting point of view the fraudulent transactions would be posted in accounts that were not being monitored. He would be responsible for posting the journal entry and disposing of the journals.
Mchunu testified that even though the posting of journal entries was his responsibility, Naidoo knew about the journal entries and when they were going through.
Mchunu admitted that he was the one who came up with the idea to post certain entries to certain accounts and he had been working there a while and knew which accounts and cost centres were safe to use for the fraudulent scheme.
Fraud alert
In August 2003, a client liaison officer from WesBank approached Mchunu regarding a fraud alert and mentioned that a number of merchants were processing multi-transactions in high amounts for repairs and maintenance.
Mchunu told the WesBank official that there were a number of merchants whom they had selected who formed part of the “Axe project” who they would use more frequently than other merchants. Unilever owns the Axe brand of deodorants.
Not satisfied with the explanation, the WesBank official called Naidoo, who confirmed Mchunu’s version of events.
When the scheme was uncovered, Naidoo pointed at Mchunu as the mastermind. A WesBank fraud investigator testified that two or three cards were being used at the same merchant on the same day.
In addition, the investigator identified from certain of the transaction times that there were anomalies in relation to repairs and maintenance at a fitment centre.
The odometer readings of the vehicles also showed a pattern and that is how the investigator was able to identify the fraudulent transactions. The investigator calculated the fraud to amount to R16.2m, but this was reduced to R15.7m to take into consideration the R500,000 seized from Mchunu’s pension fund.
Naidoo, who defended himself in court, did not take the witness box. However, he had argued that he was not party to the fraud.
Judge Jacqueline Henriques last week accepted Mchunu’s evidence that Naidoo was the ringleader. “I accept Mchunu’s evidence that it was the first defendant [Naidoo] who had devised the scheme and was instrumental in every stage of its development, but more so was involved in the maintenance of the scheme and would often discuss strategies on how to continue the scheme and avoid detection despite the various changes and obstacles which presented themselves over the period of time,” she said in her judgment.
“In addition, I accept Mchunu’s evidence that not only was the first defendant aware of the fraudulent scheme, it would appear that he was on friendly terms with a number of the merchants who were in possession of the garage cards and who used them to generate millions of rand worth of unlawful transactions.”
The judge also accepted expert testimony that Naidoo “received vast sums of money by way of cash deposits into his account without any legitimate source of income”.
Naidoo didn’t respond to questions sent to him. Pather could not be reached for comment.
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