EITHER Tanzania is free from cases of ‘economic crime,’ or the country could be among those ranked very low, Dar es Salaam apparently has escaped mention in the just released report findings.
Kenya ranks second at 75 per cent, becoming the only East African country to make into the rather dark list. Even developed world isn’t spared, because France has taken the third place with 71 per cent.
However, according to the report made available in Arusha yesterday, half of the top ten countries that reported economic crime were from Africa, making the situation on the continent more than dire. South Africa tops the bill with around 77 per cent of SA organisations reported to have experienced economic crime; while fraud committed by consumers ranks as the second most reported crime in the country.
Company executives and board members for various firms were also found to be increasingly being held accountable for economic crime; with only 37 percent of respondents seen to have conducted anti-bribery or anticorruption risk assessment, and 19 per cent of organisations have spent between twice and ten times as much on investigations as the original amount lost to economic crime. The Global Economic Crime and Fraud Survey examined over 7,200 respondents from 123 countries, of which 282 respondents were from South Africa.
Mr Trevor White, the PwC Partner, Forensic Services and South Africa Survey Leader, says: “Economic crime continues to disrupt business, with this year’s results showing a steep incline in reported instances of economic crime. At 77 and 75 per cent respectively, South Africa and Kenya’s rate of reported economic crime remains significantly higher than the global average rate of 49 per cent.
However, this year saw an unprecedented growth in the global trend, with a 36 per cent period-on-period increase since 2016. Economic crime in South Africa is now at the highest level over the past decade. It is also alarming to note that 6 per cent of executives in South Africa (Africa 5 per cent and Global 7 per cent), simply did not know whether their respective organisations were being affected by economic crime or not.
While the overall rate of economic crime reported was indeed the highest for South Africa, the period-on-period rate of increase for South Africa and Africa as a whole was below that of our American, Asian and European counterparts. From a regional perspective, the biggest increase in experiences of economic crime occurred in Latin America, where there was a 25 percent increase since 2016 to 53 percent in respondents who indicated they had experienced economic crime.
The United States was a close second with a 17 per cent increase over 2016 to 54 per cent of respondents, while Asia Pacific and Eastern Europe experienced increases of 16 per cent and 14 per cent, respectively. Asset misappropriation continues to remain the most prevalent form of economic crime, reported by 45 per cent of respondents globally and 49 per cent of Africa and South African respondents. While the instances of reported cybercrime showed a small decrease in the South African context (29 percent in 2018 versus 32 percent in 2016), retaining its second place in the global rankings (31 percent) albeit at a lower rate of occurrence than 2016. One of the new categories of economic crimes was that of “fraud committed by the consumer”.
It is the second most reported crime in South Africa at 42 percent and takes third place globally at 29 per cent. According to the survey, 35 per cent of South African respondents lost more than US $100,000 to what they regarded as the most disruptive economic crime to affect them, with 1 percent reporting losses of greater than US $100 million.
Trevor Hills, Forensic Services Leader for PwC Southern Africa, says: “Technology is clearly a fundamental tool in the fight against fraud, but it’s not the only one. Ultimately, when it comes to blocking that ‘last mile’ to fraud, the returns from investment on people initiatives are likely to far exceed those from investing in another piece of technology.
Focusing on human behaviour offers the best opportunity for reducing or preventing fraud, because ultimately, machines don’t commit fraud, people do–they just happen to be using technology more and more in these endeavours.” Despite higher levels of understanding and reporting of fraud, blind spots still prevail. 46 per cent of respondents globally said their organisations have still not conducted any kind of risk assessment for fraud or economic crime. Only three in four South African organizations said they had conducted any kind of fraud or economic crime risk assessment.
Additionally, only around a third (37 per cent) of respondents had conducted an anti-corruption risk assessment. “This is a worrisome statistic, considering how expensive this crime has become worldwide on both the regulatory and financial sides,” Hills commented
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