Economic crime: Bribery and corruption in SA business
April 11, 2014
Just over a month ago, PwC released its annual Global Economic Crime Survey to the media. It showed a sorry state of affairs as corporate crime appears to be the scourge of the South African business world and it’s only getting worse. How much worse is it actually getting?
The survey exposed the shocking prevalence of economic crime stating that SA companies are hit by more fraud, bribery and corruption than their global counterparts. According to the report, the percentages have climbed since 2011. It’s a bitter blow for ethics and integrity in local business and intensifies the challenge facing national business leaders today.
Profiling the enemy within
The survey reveals a profile of the typical fraudster lurking in senior and middle management. He is usually:
This fraudster, it says, commits more than 70% of all internal fraud.
This is a frightening indicator of corporate crime in business. The survey reveals that SA organisations:
This, to me, shows a lack of vigilance or a fatal complacency or non-acceptance of the current status quo.
It’s never too late to start with people risk assessments
It is never too early or too late to start with people risk assessment or security strategies. These 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 will get.
Start by revising your code of conduct
It’s time to ask some tough questions.
Ripping out the corporate crime root
According to the PwC survey, South Africa has reported significantly high instances of:
– Procurement fraud,
– Bribery and corruption,
– Financial statement fraud, and
– HR fraud.
The rise of the ‘tenderprenuer’ is a worrying trend in South Africa and is something both government and the private sector need to weed out. Establishing 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, there should also be a safe channel for individuals to report corruption.
HR fraud stands at 42% in South Africa vs 15% globally
If there is a chance HR managers are hiring the wrong people or covering up for senior staff, the entire structure of an organisation is compromised. It may 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.