How to Prove Fraud

by Henk Botha  FIAC  B. IUR.  LL.B
© 2000 Bellstone Training (International) Limited
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This article describes South African law.

What is fraud?

The legal definition of fraud is that it is the:

What must an employer prove?

You must prove all four these elements of the definition. Let's briefly look at each.

1. Unlawfulness

Any distortion of the truth is unlawful. So, if you can prove a misrepresentation of facts, you automatically prove the unlawfulness.

2. Intention

One has to prove two things, namely that the perpetrator —

3. Misrepresentation

You have to prove that the perpetrator lied or deceived someone, by either stating something or by failing to reveal essential information.

4. Calculated to prejudice

One has to prove actual prejudice or potential prejudice. It is not important that the complainant must have suffered prejudice or potential prejudice. The prejudice may refer to anyone.

A short example:

An employee, who is the company's bookkeeper, lies to her bank about her salary. She told this lie on a loan application form to buy a car. She told the bank that her monthly salary was R8,000, while the truth was that it was only R4,000. The bank checked the information by telephoning the company's financial director. The truth becomes known. She recently completed tax forms where she wrote her correct salary. Can the company successfully charge the employee with fraud?

Yes. There is proof of a distortion of the truth (element three). This automatically proves unlawfulness (element one). There is also proof that she knew the information was false, because she wrote the correct amount on the tax form. She knew the bank could suffer prejudice if it gave her a loan because of a high salary (elements two and four). The fact that the company would not suffer prejudice, is immaterial. The bank could suffer prejudice. It does not matter that the bank did not suffer prejudice. Potentially, it could have suffered prejudice.

Can the Company take disciplinary action against the bookkeeper? That will depend on whether the fraud has damaged the employeremployee relationship so severely that a continuation becomes intolerable.