Financial Times

Letter
Small firms affected by cheque frauds
It has been brought to our notice that several companies in the small- and medium-size sector have found themselves in great difficulties, some even to the extent of having to close down, as a consequence of their being paid by cheques drawn knowingly by fraudsters on accounts with inadequate funds or after the accounts have been closed down by the banks.

The affected companies, unlike larger firms, do not have the necessary resources to tackle such shortfalls in their cash flow or to go through the lengthy and costly process of litigation necessary to try to retrieve the money for the goods and services provided by them in good faith to such cheats.

Generally, when a complaint regarding an invalid cheque is made to the Police, action is taken to help the victims of these frauds by filling the relevant charges in terms of the provisions of the Penal Code, which, unfortunately, often results in the culprits being released on bail. Often the malefactors either do not appear in Court or disappear altogether.

An adverse side-effect is that hard working and conscientious Police officers tend to get discouraged when they see their law-enforcing efforts go to waste.

Parliament, realising that many industrious entrepreneurs were being destroyed by the activities of cheque fraudsters, passed the Debt Recovery (Special Provisions) Act No 2 on 6 March 1990 to overcome shortcomings in the relevant sections of the Penal Code.

Unfortunately our sources reveal that most Police Stations, the Fraud Bureau and the CID do not make use of this new law, which creates an offence distinct from the offence of cheating as defined in the Penal Code.

The new law provides for the imprisonment of those issuing cheques without the necessary funds in their bank accounts. CIMOGG is inclined to believe that the Police, being historically more familiar with the Penal Code, have not adequately familiarised themselves with the 1990 law and not made use of its provisions in these type of cases.

We, therefore, wrote to the Inspector-General of Police and the Attorney-General on January 30, 2006 on the subject of cheque frauds, requesting to issue instructions to all Police officers involved in dealing with this type of offence regarding the need to prefer charges in respect of cheque frauds by reference to the Debt Recovery (Special Provisions) Act No 2.

The AG has indicated that the matter is receiving consideration whereas an acknowledgement by the IGP is still awaited.

Dr. A.C.Visvalingam
President, Citizens’ Movement For Good Governance

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