WHITE-COLLAR CRIME HITS 83% OF SA COMPANIES

28 November 2005

Fraud is rampant among South African companies, according to a biennial crime survey conducted by PricewaterhouseCoopers (PwC).

Businesses in South Africa are twice as likely to be defrauded as their counterparts in the rest of the world.

A joint global survey conducted by PricewaterhouseCoopers and the Martin Luther University in Germany sampled more than 3 600 companies worldwide, and found that in 2005, 83% of South African companies reported fraud while globally only 45% were targeted by white collar criminals.

The latest statistics confirmed the trend shown in a similar 2003 survey when 71% of South African companies had fallen prey to swindlers compared to 37% globally.

PricewaterhouseCoopers's Malcolm Campbell said the 17% increase in commercial crime locally was attributed to increased awareness and reporting of white collar crime.

More than half of the perpetrators were the companies' own staff and management.

Campbell said employees had a strong understanding of the business and spotted strengths and weaknesses of controls.

In South Africa, 53% of perpetrators were found in middle and upper management.

Senior managers found with their fingers in the till were less likely to be dismissed than staff at other levels.

Most of the swindlers in South Africa are men (80%) in their 40s.

Campbell's partner in the company and colleague in their Forensic Services Department, Peter Cromhout, said the perception that South Africa was rife with commercial crime was reflected in the company insurance figures, which showed that about half of all local companies insured themselves against external fraud.

The cost of insurance against internal fraud was apparently excessive which perhaps suggested that the risk for insurers in the threat of employees' targeting their bosses were just too great.

Campbell said a third of commercial crime was exposed by chance.

He also lashed out at the police and justice authorities who, he said, contributed to the dismal picture of commercial crime in South Africa.

The police commercial crime units were "hopelessly under-resourced and inexperienced", Cromhout said.

"The average experience of forensic investigators is just one year.

The more experienced investigators are lost to the private sector.

That's probably why a case we had wrapped up in 1997, involving only R6 000, resulted in a telephone call from a prosecutor wanting to discuss the case only this month," Cromhout said.

Campbell said the global survey involved interviews conducted with senior executives of 3 634 companies in 34 countries in 15 different languages.

In South Africa managers of 100 major companies or organisations were questioned.

Source:

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