Corporate crime is the scourge of business in South Africa and it’s getting worse. PricewaterhouseCoopers released its annual Global Economic Crime Survey to the media this week.
It exposed the shocking prevalence of economic crime, stating the companies here at home are hit by more fraud, bribery and corruption than their global counterparts. Since 2011, the report states, the percentages have climbed. It’s a bitter blow for ethics and integrity in local business and intensifies the challenge facing business leaders in South Africa today.
Profiling the enemy within
The survey also reveals a profile of the typical fraudster lurking in senior and middle management. He is usually male, between the ages of 30 and 40, university educated and has been with an organisation for a long time. This fraudster, it says, commits more than 70% of all internal fraud.
This a frightening barometer of the climate of corruption in business. The survey reveals that SA organisations took no legal action in almost 10% of cases, opted for transfers in two percent and issued warnings in just less than 20 percent of the cases. This, to me, shows either a lack of vigilance or a fatal complacency or acceptance of the current status quo.
As an agency dedicated to mitigating people risk within companies, we strive to screen employees or suppliers, create fraud prevention strategies and foster a happy, honest and productive environment for all. However, how does that help if the criminal is in a senior position of authority and has been with the organisation for a long time?
It is never too early or too late to start with people risk assessment or security strategies. It can be implemented at all stages of employment, regardless of an employee’s seniority or service record. The longer you leave it, however, the deeper the corruption and opportunity to commit further transgressions.
Firstly, it may be time to take a good hard look at your code of conduct. It’s time to ask some tough questions. Do you have a zero-tolerance approach to dealing with fraud and corruption in your organisation? More than that, look at the culture of your industry. Is it known for its shady dealings? Have you bought into that perception? How will you deal with the consequences of a bad reputation?
Ripping out the root of the problem
According to the PricewaterhouseCoopers survey, South Africa has reported significantly high instances of procurement fraud, bribery and corruption, financial statement fraud and human resources fraud.
The rise of the tenderpreneur is a worrying trend in South Africa. It is something both government and the private sector need to weed out. A new central government office to oversee all tenders is a step in the right direction, but perhaps companies need to put in place more transparent checks and balances. In addition, perhaps there should also be a safe platform for individuals to report corruption.
According to the report, Human Resources fraud stands at 42% in South Africa versus 15% globally. If there is a chance that HR managers may be hiring the wrong people or covering up for senior staff on the make, the entire structure of an organisation is compromised. Would it not be a good idea to bring in an independent HR service to conduct integrity assessments, counseling or provide team building and wellness programmes.
When necessary, you may need an independent and authoritative risk assessment on your entire company, including vendors, tenants and other suppliers. To get to the core corruption, this service should be intense and thorough. In this regard, you should work with a security consultancy with a proven reputation.
Put the right people at the top
What needs to happen, in my opinion, is that we need to get corrupt and unethical officials and managers out of South Africa organisations once and for all. We need to replace them with strong, principled men and women, with vigorous business sense and a vigilant eye on corruption. These are the people who can lead South Africa towards a more lucrative and respected business model. Let’s not make headlines in a global corporate crime survey for the wrong reasons ever again.
– Jenny Reid: Managing Director of iFacts