More senior staff commit fraud

Johannesburg - Economic crime is flourishing in the global downturn - more than 60% of South African businesses have been hit in the past year.

Louis Strydom, head of forensic services at PricewaterhouseCoopers (PwC), says opportunities and incentives for fraud increase in an economic downturn.

Almost two-thirds of the 63 South African respondents in PwC's latest survey on economic crime were victims in the past 12 months, compared with a global average of 30%. Of these, 54% said fraud in their businesses had increased in the past year.

Financial-statement fraud has risen worldwide in the past four years. However, in South Africa it had declined from 45% in 2005 to 39% in 2009.

A total 82% of the South African respondents who experienced economic crime suffered theft of assets, compared with 67% worldwide.

According to the survey the profile of the financial criminal is changing.

Most are still in-house. Middle managers are now committing 29% of all such crimes in South Africa, compared with 22% in 2007. Junior staff members remain the biggest offenders and in the 12 months were responsible for 50% of all local incidents.

Bribery and fraud were uncovered at 59% of the firms, but at only 27% globally.

Although the share prices of only 10% of South African enterprises reporting economic crime were affected by such misconduct, 33% indicated that staff morale had been negatively impacted by it.

- Sake24.com

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