SA firms hit by more fraud than rest of world – survey

2014-02-19 12:59

South African companies experience more fraud and bribery than their counterparts elsewhere in the world, a survey by PricewaterhouseCoopers has found.

They are being hit by a higher incidence in every category of economic crime except intellectual property infringement and mortgage fraud, it said in its Global Economic Crime Survey 2014 released yesterday.

Bribery and corruption have become the fastest-growing economic crime category in South Africa since 2011.

The survey found senior management was the main perpetrator of economic crimes in the country.

“Our survey results indicate that the typical internal fraudster is male, aged between 31 and 40, has worked for his employer for more than 10 years and has acquired a first university degree,” it said.

“This profile is consistent with South African organisations reporting that senior and middle management commit 77% of all internal fraud.”

In the survey, 5 128 senior businessmen and businesswomen from 93 countries took part in an online survey in the fourth quarter of last year.

This was the first time since 2005 that the prevalence of economic crime had increased in South Africa.

“The latest results show that economic crime remains a serious challenge to business leaders, government officials and private individuals in South Africa – 69% of South African respondents indicated they had been subjected to some form of economic crime in the 24 months preceding the survey, compared with 37% of global respondents.”

The report listed various crimes and the percentages of each crime experienced in the past 24 months in South Africa compared with the rest of the world.

In the past 24 months, 77% asset misappropriation was experienced in South Africa compared with 69% around the world.

South Africa experienced 59% procurement fraud in the past two years compared with 29% globally.

Bribery and corruption stood at 52% in South Africa compared with 27% around the world.

Human resources fraud was at 42% in South Africa and 15% globally.

The report found that the country experienced 14% money laundering, while it was at 11% globally.

Tax fraud was at 11% in South Africa and 6% globally.

The survey found that South African respondents reported significantly more instances of procurement fraud, bribery and corruption, financial statement fraud and human resources fraud than their global counterparts.

“In the remaining categories, the distribution of economic crime in South Africa mirrors the global picture,” it said.

South African entities took no action in 9% of cases, opted for transfers in 2% or warnings in 18% of cases.

“This is worrying as it suggests that the perpetrators remain within the organisations where they may commit further transgressions,” it said.

“It is important for organisations to adopt a zero-tolerance approach by dealing with fraudsters in an official and transparent manner, rather than sweeping the problem under the carpet internally,” stated the survey.

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