Fraud a major problem in Africa

JOHANNESBURG – Fraud is a major problem in South Africa and Africa, a survey of businesses revealed yesterday.

The survey, by auditing firm KPMG, said 64 per cent of the South African companies and 65 per cent of companies in the rest of Africa reported that fraud was a major problem. “Respondents are mostly of the same opinion: that businesses and organisations need to have the necessary internal controls and preventive measures in place to prevent fraud,” said the managing director of forensics at KPMG, Petrus Marais.The survey was carried out in 13 African countries and had 495 responses, 237 of which were from South Africa.The report found that economic pressure, more sophisticated criminals, a weakening of society’s values and inefficiencies in the justice system were contributing to an increase in fraud.”Our perception is that fraud is a serious factor that affects foreign direct investment,” Marais said.”If a country’s judicial system is considered corrupt or there is no legislation to protect intellectual capital then this will create problems and will impact on a business’s decision before it enters.”South African organisations indicated in the latest survey that fraud was less of a problem than three years ago.This could be attributed to the fact that respondents indicated a higher knowledge of fraud as well as an increase in the focus on business ethics, the report said.Seventy-six per cent of South African respondents indicated that employees were the source of fraud, compared to the African response of 78 per cent.The report said the good news was the employees were now assisting organisations in their fight against fraud.Whistle-blowing was a major tool used to detect fraud, with 53 per cent of the South African respondents indicating this.However, whistle-blowing seemed to be in its infant stages in Africa, with 53 per cent of all respondents indicating they did not have anti-corruption hotlines for employees.The report said it was alarming that more than 90 per cent of the respondents from Botswana and Zimbabwe indicated that fraud will increase in the future.- Nampa-Sapa”Respondents are mostly of the same opinion: that businesses and organisations need to have the necessary internal controls and preventive measures in place to prevent fraud,” said the managing director of forensics at KPMG, Petrus Marais.The survey was carried out in 13 African countries and had 495 responses, 237 of which were from South Africa.The report found that economic pressure, more sophisticated criminals, a weakening of society’s values and inefficiencies in the justice system were contributing to an increase in fraud.”Our perception is that fraud is a serious factor that affects foreign direct investment,” Marais said.”If a country’s judicial system is considered corrupt or there is no legislation to protect intellectual capital then this will create problems and will impact on a business’s decision before it enters.”South African organisations indicated in the latest survey that fraud was less of a problem than three years ago.This could be attributed to the fact that respondents indicated a higher knowledge of fraud as well as an increase in the focus on business ethics, the report said.Seventy-six per cent of South African respondents indicated that employees were the source of fraud, compared to the African response of 78 per cent.The report said the good news was the employees were now assisting organisations in their fight against fraud.Whistle-blowing was a major tool used to detect fraud, with 53 per cent of the South African respondents indicating this.However, whistle-blowing seemed to be in its infant stages in Africa, with 53 per cent of all respondents indicating they did not have anti-corruption hotlines for employees.The report said it was alarming that more than 90 per cent of the respondents from Botswana and Zimbabwe indicated that fraud will increase in the future.- Nampa-Sapa