Survey reveals rise in fraud by senior managers

Management has jumped on the crime bandwagon, with a “significant increase” in tax and market fraud, according to a new PwC Global Economic Crime Survey. “These crimes have previously not been as prevalent in South Africa and the increase could suggest that organisations need to revisit their fraud risk management frameworks to ensure that they are able to deal with the emerging threats,” says Louis Strydom, head of PwC’s Forensic Services Practice. For the first time since PwC initiated the survey, economic crime in South Africa is being committed equally by internal and external perpetrators. Globally, the majority of crimes are committed by internal parties. The emergence of this type of crime reflects a shift in the South African perpetrator profile. “These economic crimes require access to sensitive information and more sophisticated ‘know-how’, which senior management usually possess.” In 2011, 36% of internal economic crimes were carried out by senior management, compared to 17% in 2009. The survey, which is carried out every two years, found that economic crime challenges business worldwide. Countries that reported high levels of fraud (40% or more) include Kenya, South Africa (60%), Australia and New Zealand. The global average is 34%. Jurisdictions that reported low levels of fraud (25% or less) include Japan, Indonesia, Italy and Greece. On the positive side, the survey found that the prevalence of economic crime in South Africa had decreased from 83% in 2005 to the current 60%.