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South Africa has the highest rate of economic crime in the world

South Africa has the highest rate of economic crime in the world

South African organisations have reported the highest rate of economic crime in the world over the last two years, according to a new Global Economic Crime Survey by financial services company, PwC.

PwC said that 69% of organisations surveyed report being victims of economic crime, unchanged from 2014, while 32% of organisations have experienced cyber crime.

South African organisations reported a considerably higher frequency in the incidence of economic crime in comparison to their African and global peers.

“When compared to the global statistic of 36%, we are faced with the stark reality that economic crime is at a pandemic level in South Africa. No sector or region is immune from economic crime,” said Louis Strydom, Forensic Services Leader for PwC Africa.

South Africa was ahead of France (68%), Zambia (61%), Kenya (61%), UK (55%), Spain (55%), and Australia (52%) in the biennial list.

“The fact that developed countries are included in the list of the top ten countries reporting the highest rates of economic crime brings home a clear message – economic crime is a global issue and one that affects developed markets as much as it does emerging ones,” said Strydom.

South Africans also exhibited significantly low levels of confidence in local law enforcement agencies, with 70% of organisations believing agencies are inadequately resourced and trained to investigate and fight economic crime.

This is almost twice the global rate of 44%.

PwC interviewed 6,337 participants in 115 countries, with 232 organisations interviewed locally, from a broad spectrum of industries.

The survey found that asset misappropriation remains the most prevalent form of economic crime reported by 68% of respondents. It is followed by procurement fraud (41%), and bribery and corruption (37%).

Cybercrime has risen to the fourth most reported type of economic crime in South Africa, with 32% of organisations affected – on par with the global average.

Cost of economic crime

Economic crime is costing businesses billions of dollars. While more than half of the global organisations surveyed reported having lost less than $100,000 to economic crime over the last 24 months, only 43% of South African organisations could make that claim.

Almost a fifth of local respondents experienced losses of between $100,000 (R1.6 million) and $1 million (R15.7 million), and one in four respondents indicated having suffered losses of more than $1 million.

The fraudster profile

For the first time since 2009, external actors exceeded internal actors as the dominant profile of fraudsters acting against an organisation (46% external versus 45% internal).

South African organisations were reported to be more than twice as likely to be defrauded by vendors compared to the rest of the world.

Reports of senior management perpetrating economic crimes against the organisations they work for more than halved from the previous survey (from 41% to 15%), while middle management appear to have taken centre stage, with 39% of fraud being perpetrated by internal actors emerging from this band.

Cybercrime

Incidents reported were up 23%when compared to the previous survey conducted in 2014.

More than half of organisations (57%) believe it is likely that their organisations will experience cybercrime in the next 24 months.

Most companies are still not adequately prepared for, or even understand the risks faced, with only 35% of organisations reporting they have a fully operational cyber incident response plan in place.

It is concerning to note that should a cyber crisis arise, only 34% of organisations have personnel that are ‘fully trained’ to act as first responders, and 20% of companies indicated that they will make use of outsourced personnel, PwC said.

More on corruption

Corruption is ruining South Africa’s democracy

The biggest corruption problems in the world – and where they happen most

Chronic corruption is baked into SA’s fundamentals


Gareth is the editor at BusinessTech. Gareth was previously the ICT Editor at BusinessLive/I-Net Bridge. Gareth holds a degree in Journalism from Rhodes University....
Join the Conversation (15 comments)
  • Veldmeisie

    It starts with Numba One.

  • Joe Black

    Ha! Its 100%. We are all victims of economic crime from the government.

  • Gary Fields

    Does paying tax to a corrupt government count ?

    • weepee1

      You have a point Gary. By giving money to thieves you are perpetuating more theft.

    • Hell yes!

  • Anti-EToll & Anti-DSTV

    and the citizens of South Africa is contributing to the corruptness, we are funding the cancer… stop paying taxes. #taxesmustfall

  • BV

    Why remind us of that? We know it already. It happens from the man leading the country and all his friends, so its kinda obvious that “South Africa has the highest rate of economic crime in the world”.

  • bengine

    SARS and the Banks I see are not on the list …

  • Jacobus Pienaars

    It’s pronounced Nkaaaaaaaaaaaandla…

  • weepee1

    Another 1st for SA yipeeeeeee.

  • Blapartheid Zulu

    yay! another first for south africa! we truly have a good story to tell! How we became No.1 in so many categories!

  • Jacques

    Wow! it’s much better than the grade 12 pass rate!
    Keep going there’s still 31% room for improvement!

  • RainbowMan

    Named: Van Rooyen’s two Gupta “advisors” who almost hijacked SA Treasury

    The day after the shock of respected Finance Minister Nhlanhla Nene being replaced by an unknown backbencher,
    David van Rooyen arrived at National Treasury with his two until now
    unnamed “advisors.” In this article republished with its permission, London-based Africa Confidential names the duo as “Gupta allies” Mohamed Bobat and Ian Whitley and explains the context in graphic detail. Their
    arrival so shook the Treasury that its Director General threatened to
    resign and his staff immediately dubbed the event “9/12” – a reference
    to the US’s disastrous “9/11” of 2001.

    Former Finance Minister Trevor Manuel was so incensed that he wrote an open letter that
    was highly critical of President Jacob Zuma, Van Rooyen and the dark
    forces manipulating them for publication in City Press. After Zuma’s December 9
    shock (“9/12”) decision, the rand plummeted, financial shares crashed
    and bond yields surged. After wiping R500bn off the value of South
    African assets, Zuma was forced into reversing his appointment, replacing him with Pravin Gordhan, the man he had fired a year and a half earlier. Here’s the fascinating inside story from Africa Confidential, the subscription-only service which have been covering the continent for more than half a century. – Alec Hogg

    From Africa Confidential*

    Delivering the State of the Nation address at the opening of what promises to be the South African Parliament’s most turbulent year, President Jacob Zuma announced a series of measures to shore up the country’s ailing economy, including cutting government expenditure, revamping the management of state-owned enterprises and partnering with the private sector to promote domestic and foreign investment.
    File
    photo: David van Rooyen, South Africa’s then incoming finance minister,
    pauses during his swearing in ceremony at the Union Buildings in
    Pretoria, South Africa, on Thursday, Dec. 10, 2015. The rand fell for a
    sixth day in the longest streak of losses since November 2013, stocks
    slid and bond prices tumbled the most on record after South African
    President Jacob Zuma fired Finance Minister Nhlanhla Nene and replaced
    him with a little-known lawmaker. Van Rooyen was then replaced by Pravin
    Gordhan. Photographer: Waldo Swiegers/Bloomberg

    The measures are high on the wish list of a formerly
    disengaged business community which was shocked into action by Zuma’s
    disastrous sacking of Finance Minister Nhlanhla Nene on 9 December and
    the crash in share prices and the value of the rand
    that followed. The dismissal of Nene turned out to be the latest in a
    series of cabinet appointments made to circumvent resistance to the deal
    Zuma struck with Russia’s President Vladimir Putin last year to build nuclear power plants in South Africa.
    Successive Ministers of Finance and of Energy who voiced
    their opposition to the deal over its enormous cost were removed from
    office.

    The main beneficiaries of the nuclear deal would have included the controversial Gupta family
    – three Indian brothers who have become massive beneficiaries of Zuma’s
    patronage. The Guptas influenced Zuma to appoint the previously unknown
    David ‘Des’ van Rooyen as Finance Minister, it is now generally
    accepted. Their intention was to secure uranium contracts for
    the nuclear plants in the same way they have for the coal and arms sector, according to the local press.

    Another part of the strategy was to place two Gupta
    allies, whom Africa Confidential is able to name as Mohamed Bobat and
    Ian Whitley, as advisors to Van Rooyen at the Treasury. Whitley is a
    former head of small and medium enterprises at African Bank. When Van
    Rooyen was replaced at the Treasury, the two men went with him to his
    new portfolio of Local Government and Traditional Affairs, and appeared with him when he was sworn in on 10 December.

    Bobat and Whitley, who have associations with the Guptas
    and their businesses, visited the Treasury before Van Rooyen’s
    appointment and told officials there that they would be able to sign
    expenditure and other authorisations on behalf of the new minister but
    otherwise there would be no changes. Senior Treasury officials led by
    Director General Lungisa Fuzile were so appalled that they threatened to
    resign unless Van Rooyen’s appointment was reversed.

    Then there is the strange case of Van Rooyen’s childhood
    friend, Gaddafi Rabotapi, who, former Finance Minister Trevor Manuel
    pointed out in an angry open letter to Minister Lindiwe Zulu
    on 20 December, had known about Van Rooyen’s appointment a full month
    before it was announced by Zuma. Manuel also said that the proper
    procedures had not been followed in the appointment of Bobat and
    Whitley, whom he did not name in the letter, nor had it been established
    that they had the requisite skills for either portfolio.

    Following the firing of Nene in December, it was the business leaders acting in concert with moderates in the African National Congress who
    forced Zuma at political gunpoint to reverse his appointment of
    a stooge as finance minister and re-instate the highly-respected Pravin Gordhan. Further details have now emerged about the meetings in which Zuma fought tooth and nail not to give in. At
    one of them Patrice Motsepe, the billionaire benefactor of the
    governing party, told Zuma to be quiet and listen to the
    business leaders. Zuma’s former wife, Nkosazana Dlamini-Zuma, the main rival of Deputy President Cyril Ramaphosa in the succession stakes, expressed shock that the President could be addressed in such a way………………..

    • Now get this info out to the the ‘Votas” May win over e few hundred!!

  • SpeakingTruth

    That is because a certain part of the population see it as their right to steal from their employer and dont see there is anything wrong with and it starts at the top with the president. They see him getting away with it and when caught deny any wrong doing and the companies are also to blame as they are reluctant to prosecute the offenders and let them resign with a clean bill of healthy and they move to the next company to do the same.

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