Scrap copper scam probe under attack

THE way in which an investigation was conducted into an alleged corrupt and fraudulent scrap copper sale scheme at Telecom Namibia close to seven years ago came under sharp attack in the High Court in Windhoek yesterday.

As soon as the defence team of the three men accused of having been involved in the alleged scheme got their turn to start cross-examining chartered accountant and certified fraud examiner Peter Cromhout, who is the prosecution’s first witness in the three men’s trial, an attack on the manner in which Cromhout had investigated the alleged scam also got under way. The three accused men – businessmen Heinz Dresselhaus and Ettiene Weakley, who are partners in one of Namibia’s largest scrap dealers, Dresselhaus Scrap CC, and former Telecom Namibia General Manager James Camm – pleaded not guilty to thirty charges when their trial started before Judge Collins Parker on Tuesday.They denied guilt to 13 main counts of fraud, 11 main counts of corruption, and six main charges of theft.All the charges relate to allegations that in the period between late 1998 and early 2001, while Dresselhaus Scrap had a contract to buy scrap copper from Telecom Namibia, it had paid bribes totalling N$315 550,90 to Telecom Namibia’s then Manager: Procurement, Ivan Ganes, and had shared “commissions” totalling N$984 698,60 with Ganes and Camm.At the same time, it is alleged, Dresselhaus Scrap was allowed to fraudulently pay lower than agreed prices for scrap copper bought from Telecom Namibia and to wrongly charge Telecom Namibia for its labour and removal costs, after Ganes had prepared invoices based on which the scrap dealer paid for the scrap metal.Cromhout has testified that he became involved in an investigation of suspected irregularities with the sale of scrap copper by Telecom Namibia at the end of June 2001, after the company had asked chartered accountants PriceWaterhouseCoopers, where he is a partner, to conduct such an investigation.A report that has been submitted to Judge Parker as evidence in the trial was eventually compiled by him in 2006.In the report, Cromhout dealt with various invoices issued to Dresselhaus Scrap by Ganes on behalf of Telecom Namibia, pointing out in what respects the price of copper bought by the scrap dealer had been incorrectly calculated according to him.He also dealt with various payments that bank and accounting records indicated Ganes had received from Dresselhaus Scrap and Weakley.In his plea explanation Weakley has admitted that he and Dresselhaus Scrap paid a total of N$356 550,90, all by cheque, to Ganes between October 22 1998 and December 18 2000.Cromhout indicated in his testimony that his analysis of the invoices that Ganes issued to Dresselhaus Scrap was based on his reading of the written agreement for the sale of the copper that Dresselhaus Scrap and Telecom Namibia signed on October 9 1997, and on explanations from senior Telecom staff about that contract having being the only agreement regarding the scrap copper sale arrangement that was in force between the parastatal and Dresselhaus Scrap.However, according to the plea explanation that Weakley provided to the court and with which Dresselhaus associated himself, their scrap dealership and Telecom Namibia had also agreed after the initial contract was signed that a different payment arrangement would apply when Dresselhaus Scrap not just had to collect scrap copper from a designated collection area, but itself had to dismantle obsolete copper phone lines at various places across Namibia.According to Cromhout, though, he was informed by the members of the Telecom management who were involved in the investigation that only the written contract applied to the copper sales agreement with Dresselhaus Scrap.That contract, however, makes no reference to a scenario where Dresselhaus Scrap would have had to dismantle disused phone lines itself, one of the defence lawyers of Dresselhaus and Weakley, senior counsel Willie Vermeulen, pointed out to Cromhout under cross-examination yesterday.When Cromhout told Vermeulen in reply that one clause of the written agreement stated that Dresselhaus Scrap also agreed to “cut up and to remove scrap from other areas as designated by Telecom at no extra charge to Telecom”, Vermeulen in turn pointed Cromhout to the definition of “scrap” in the agreement.This definition refers to scrap only as “all copper wire, copper bars and copper cable placed by Telecom in the collection area for removal” – with no reference made to obsolete lines that Dresselhaus claims to have had to dismantle itself in order to buy the copper.He would not know whether the definition or the other clause binding Dresselhaus Scrap to removing scrap from other areas at no extra cost to Telecom Namibia would take preference, Cromhout answered to this.While doing his investigation, he never approached either Ganes or Weakley or Dresselhaus or the bookkeeper at Dresselhaus Scrap for explanations on how payments were calculated and why payments were made, Cromhout also confirmed under cross-examination from Vermeulen.”You drew a lot of inferences against Mr Weakley, Dresselhaus (Scrap), on the basis of bookkeeping entries which you say were suspicious.Why didn’t you ask for an explanation?” Vermeulen asked Cromhout at one stage.He replied that at that time of his investigation the focus was on recovering money from Ganes.He also did not interview Dresselhaus Scrap’s bookkeeper to get an explanation because at that stage he did not think that was necessary, Cromhout added under continued questioning.”You decided you had them on the hook.You didn’t want to hear an exculpatory explanation,” Vermeulen remarked on hearing this.The three accused men – businessmen Heinz Dresselhaus and Ettiene Weakley, who are partners in one of Namibia’s largest scrap dealers, Dresselhaus Scrap CC, and former Telecom Namibia General Manager James Camm – pleaded not guilty to thirty charges when their trial started before Judge Collins Parker on Tuesday.They denied guilt to 13 main counts of fraud, 11 main counts of corruption, and six main charges of theft.All the charges relate to allegations that in the period between late 1998 and early 2001, while Dresselhaus Scrap had a contract to buy scrap copper from Telecom Namibia, it had paid bribes totalling N$315 550,90 to Telecom Namibia’s then Manager: Procurement, Ivan Ganes, and had shared “commissions” totalling N$984 698,60 with Ganes and Camm.At the same time, it is alleged, Dresselhaus Scrap was allowed to fraudulently pay lower than agreed prices for scrap copper bought from Telecom Namibia and to wrongly charge Telecom Namibia for its labour and removal costs, after Ganes had prepared invoices based on which the scrap dealer paid for the scrap metal.Cromhout has testified that he became involved in an investigation of suspected irregularities with the sale of scrap copper by Telecom Namibia at the end of June 2001, after the company had asked chartered accountants PriceWaterhouseCoopers, where he is a partner, to conduct such an investigation.A report that has been submitted to Judge Parker as evidence in the trial was eventually compiled by him in 2006.In the report, Cromhout dealt with various invoices issued to Dresselhaus Scrap by Ganes on behalf of Telecom Namibia, pointing out in what respects the price of copper bought by the scrap dealer had been incorrectly calculated according to him.He also dealt with various payments that bank and accounting records indicated Ganes had received from Dresselhaus Scrap and Weakley.In his plea explanation Weakley has admitted that he and Dresselhaus Scrap paid a total of N$356 550,90, all by cheque, to Ganes between October 22 1998 and December 18 2000.Cromhout indicated in his testimony that his analysis of the invoices that Ganes issued to Dresselhaus Scrap was based on his reading of the written agreement for the sale of the copper that Dresselhaus Scrap and Telecom Namibia signed on October 9 1997, and on explanations from senior Telecom staff about that contract having being the only agreement regarding the scrap copper sale
arrangement that was in force between the parastatal and Dresselhaus Scrap.However, according to the plea explanation that Weakley provided to the court and with which Dresselhaus associated himself, their scrap dealership and Telecom Namibia had also agreed after the initial contract was signed that a different payment arrangement would apply when Dresselhaus Scrap not just had to collect scrap copper from a designated collection area, but itself had to dismantle obsolete copper phone lines at various places across Namibia.According to Cromhout, though, he was informed by the members of the Telecom management who were involved in the investigation that only the written contract applied to the copper sales agreement with Dresselhaus Scrap.That contract, however, makes no reference to a scenario where Dresselhaus Scrap would have had to dismantle disused phone lines itself, one of the defence lawyers of Dresselhaus and Weakley, senior counsel Willie Vermeulen, pointed out to Cromhout under cross-examination yesterday.When Cromhout told Vermeulen in reply that one clause of the written agreement stated that Dresselhaus Scrap also agreed to “cut up and to remove scrap from other areas as designated by Telecom at no extra charge to Telecom”, Vermeulen in turn pointed Cromhout to the definition of “scrap” in the agreement.This definition refers to scrap only as “all copper wire, copper bars and copper cable placed by Telecom in the collection area for removal” – with no reference made to obsolete lines that Dresselhaus claims to have had to dismantle itself in order to buy the copper.He would not know whether the definition or the other clause binding Dresselhaus Scrap to removing scrap from other areas at no extra cost to Telecom Namibia would take preference, Cromhout answered to this.While doing his investigation, he never approached either Ganes or Weakley or Dresselhaus or the bookkeeper at Dresselhaus Scrap for explanations on how payments were calculated and why payments were made, Cromhout also confirmed under cross-examination from Vermeulen.”You drew a lot of inferences against Mr Weakley, Dresselhaus (Scrap), on the basis of bookkeeping entries which you say were suspicious.Why didn’t you ask for an explanation?” Vermeulen asked Cromhout at one stage.He replied that at that time of his investigation the focus was on recovering money from Ganes.He also did not interview Dresselhaus Scrap’s bookkeeper to get an explanation because at that stage he did not think that was necessary, Cromhout added under continued questioning.”You decided you had them on the hook.You didn’t want to hear an exculpatory explanation,” Vermeulen remarked on hearing this.