Economic Crime Growing!

April 1, 2014

 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 is 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 2% and issued warnings in just less than 20% 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?
Tough questions
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 tenderprenuer 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, counselling 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 is that we need to get corrupt and
unethical officials and managers out of South African
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. h8657;
Economic CRIME Growing!
Corporate crime is the scourge of business in South Africa and it’s getting worse according to the annual
Global Economic Crime Survey released by PwC.
By Jenny Reid
Managing Director
iFacts
jenny@ifacts.co.za
@iFactsSA
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