Study: Mid tier managers play big role in economic crimes

PricewaterhouseCoopers forensics leader Muniu Thoithi (left) and Alphan Njeru, the firm’s advisory leader in charge of government and public sector, during the release of an economic crime survey report at PWC Tower in Nairobi on Tuesday. Photo/ SALATON NJAU 

In Summary

• Internal fraud prevalence is thus above the global average of 56 per cent and only 2 per cent shy of the continent’s average of 63 per cent.
• Senior management accounted for 13 per cent of economic crime while the lower carder employees accounted for 28 per cent of fraud committed in the country in 2012 and 2013.

By Ramenya Gibendi
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Middle level managers are the highest perpetrators of economic crimes in organisations, says a new study.

The study by PriceWaterhouseCoopers (PwC) titled Economic Crimes; A Threat to Business Processes said the prevalence rate at which middle level managers commit fraud has been rising from 20 per cent in 2009 to 56 per cent in 2013.

Most of the economic crimes, according to the study, are committed by internal fraudsters with 124 Kenyans surveyed saying internal staff were responsible for 61 per cent of economic crimes in many organisations.

ABOVE GLOBAL AVERAGE

Internal fraud prevalence is thus above the global average of 56 per cent and only 2 per cent shy of the continent’s average of 63 per cent.

“Our prevention measures could be targeting the lower level staff thus giving more room to the middle level counterparts to exploit systems,” said Mr Moniu Thoithi, PwC’s head of forensics.

Senior management accounted for 13 per cent of economic crime while the lower carder employees accounted for 28 per cent of fraud committed in the country in 2012 and 2013.

PwC now warns that the involvement of middle level managers in fraud is likely to increase the cost of economic crimes in the country as they have more discretion over large sums of money.

“Surprisingly, there is reduced rate of fraud risk assessment within organisations which is very alarming trend,” said Mr Thoiti.

Theft of assets by directors or employees for their own benefit tops the list of the five major forms of economic crimes in Kenya with accounting fraud being the second most form of fraud reported.

Others are bribery and corruption, procurement fraud and cybercrime that is following increased technological transformations-including digitization of personal data and processes.