Fraud a worry for businesses in Africa, survey shows
September 23, 2005
By Stuart Graham
Johannesburg - Fraud was a major problem in South Africa and the rest of Africa, a survey of businesses revealed yesterday.
The survey by auditing firm KPMG said 64 percent of the South African companies and 65 percent 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 internal controls and preventative 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 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 said fraud was less of a problem than three years ago. This could be attributed to a higher knowledge of fraud as well as an increase in the focus on business ethics, the report said.
Seventy-six percent of South African respondents indicated that employees were the source of fraud, compared with the African response of 78 percent.
The report said the good news was that employees were now assisting organisations in their fight against fraud.
Whistle-blowing was a major tool used to detect fraud, with 53 percent of the South African respondents indicating this.
However, whistle-blowing seemed to be in its infant stages in the rest of Africa, with 53 percent of all respondents saying they did not have anti-corruption hotlines for employees.
The report said it was alarming that more than 90 percent of the respondents from Botswana and Zimbabwe indicated that fraud would increase in the future.
- Sapa
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