Scam Artists Target NGOs

partnerships ngos Financial sustainability scams
Monday, 14 May, 2012 - 12:35

NGOs continue to fall prey to scams, which cripple them financially and also leave them unable to sustain their development programmes

NGO founder and owner, Levy Mmelesi, got a rude awakening at a commercial expo that took place at the Mmabatho Convention Centre in Mafikeng towards the end of last year. What should have been a fruitful trade venture turned into a scam nightmare for Mmelesi and his nonprofit organisation, Dirisanang Art Centre.

It all started when a man dressed in an Eskom uniform approached Mmelesi’s stand.  After placing an order for a wallet and purchasing a pair of sandals, the gentleman named Sizwe, enticed Mmelesi into a joint marketing partnership. Mmelesi did not suspect that he would soon be the victim of a scam and R18 000 poorer.

According to a 2010/2011 South African Police Service (SAPS) Crime Report, scams and fraudulent crimes have dramatically increased in light of the recent economic recession. The report states that small, single-owner and emerging black businesses are the most vulnerable to such crimes, thereby negatively impacting the primary job-creating sectors in South Africa.

Mmelesi’s story is all too common. After their initial meeting at the expo, Mmelesi agreed to take on a large-scale catering contract and sent the required quotation to the conman - ‘Sizwe’. Within two weeks, Mmelesi was notified that two amounts, exceeding the actual quotation of R18 000 were placed into their First National Bank (FNB) account. The conman then called in a panic and requested Mmelesi to urgently transfer the extra amount back into his account. “I was quite sceptical at this stage, but he spoke to me in such an influential way,” said Mmelesi.

While Mmelesi was waiting for the transfer to clear, he made two withdrawals from the nonprofit organisation’s personal cash reserve and transferred R18 000 into the conman’s account. A few days later, Mmelesi noticed that the initial amount transferred to him had been withdrawn before clearing. As soon as the money disappeared, so did Sizwe. Mmelesi had been scammed.

Desperately, Mmelesi went to his FNB branch in Delareyville, where he was told that his money was gone. “The bank manager told me that they sent out regional scam alerts and that it was no longer the problem of the bank,” said Mmelesi.

After the incident Mmelesi opened a fraud case with the Mafikeng Police Station, but has not received any feedback nearly five months later. According to Mmelesi, the police officer informed him that he was overloaded by fraud cases on a daily basis. Upon contacting the police station regarding Mmelesi’s case, an officer asked, “What are scams? I don’t know.”

Insufficient support structures and police backlogs make it vital to take preventative measures. Scam preventative tips are accessible through the South African Fraud Prevention Services and Standard Bank website. Standard Bank recommends tips that include: confirming details of payments with your bank; retaining complete records and being cautious of clients who want to operate at a distance and require urgent action.

According to the SAPS report, small, medium and micro enterprises (SMME) are the most targeted sector for scams - cash based systems, often used by small enterprises, make this sector especially susceptible. NGOs need to be especially alert as con artists typically target NGOs under the auspices of a sponsor or funder.

As for Mmelesi and his Dirisanang Art Centre, a nonprofit organisation dedicated to providing opportunities for impoverished artists and crafters in the Delareyville area in North West, the scam ruined what had been a good year for the organisation up to that point. “We had just won the Community Builder of the Year award for our region, and also been selected as one of only 65 businesses nationally to take part in the Old Mutual Legends business development programme. Truly, this financial loss hit us hard when we were on our way up,” he explains sadly.

While he recognises that the scam artist will probably never be found, Mmelesi hopes that by sharing his experience he can help prevent other nonprofit organisations and SMME’s from falling into the same trap. “Hopefully people will respond and assist us through this difficult time, but in any event, I believe it is important that people are aware of this issue. The guy was well-spoken, confident, official looking and I had no reason at all to doubt him – but still we were taken in and lost a huge amount of money.”

- Franki Black is training manager at Fetola. Kalene Naidoo, who researched the article, is intern at Fetola.

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