BREAKING NEWS, Business
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SOUTH African organisations reported a considerably higher frequency in the incidence of economic crime in comparison to their African and global peers, with more than two in three organisations (69 percent) indicating that they had been victim to economic crime in the last 24 months, according to PwC’s biennial Global Economic Crime Survey issued today, Tuesday, March 1.
Louis Strydom, Forensic Services Leader for PwC Africa, said: “Economic crime remains a serious challenge to business leaders, government officials and private individuals in South Africa. In this survey, we have found that the trend has remained unchanged from 2014, with 69 percent of South African respondents reporting that they had experienced economic crime in the last two years.
“When compared to the global statistic of 36 percent, 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.”
Sixty-eight percent of French and 55 percent of the UK respondents also reported high increases in the rate of economic crime in the past 24 months, both up 25 percent when compared to 2014. Sixty-one percent of Zambian respondents reported economic crime, up 31 percent over 2014. “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,” Strydom said further.
According to the survey findings, South Africans also exhibited significantly low levels of confidence in local law enforcement agencies, with 70 percent of organisations believing agencies are inadequately resourced and trained to investigate and fight economic crime. This is almost twice the global rate of 44 percent.
The 2016 Global Economic Crime Survey interviewed 6,337 participants in 115 countries. In South Africa, 232 organisations from a broad spectrum of industries took part in the survey. The main aim of the survey is to inform South African business leaders about developments in the continuously changing landscape of economic crime in the country and to encourage debate around strategic and emerging issues in this sphere.
The survey found that asset misappropriation remains the most prevalent form of economic crime reported by 68 percent of respondents. It is followed by procurement fraud (41 percent), and bribery and corruption (37 percent). Cybercrime has risen to the fourth most reported type of economic crime in South Africa (up two places from 2014), with 32 percent of organisations affected, on par with the global average.
Globally, the overall rate of economic crime reported has fallen for the first year since the financial crisis, but only marginally – to 36 percent from 37 percent in 2014. Regionally, lower levels of economic crime are reported in North America (37 percent vs. 41 percent), Eastern Europe (33 percent vs. 39 percent), Asia Pacific (30 percent vs. 32 percent)) and Latin America (28 percent vs. 35 percent). The rate of economic crime rose in Africa (57% vs. 50 percent), Western Europe (40 percent vs. 35 percent) and the Middle East (25 percent vs. 21 percent).
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 percent of South African organisations could make that claim. Almost a fifth of local respondents experienced losses of between $100 000 and $1 million, and one in four respondents indicated having suffered losses of more than $1 million.
For the first time since 2009, external actors exceeded internal actors as the dominant profile of fraudsters acting against an organisation (46 percent external versus 45 percent 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 percent to 15 percent), while middle management appear to have taken centre stage, with 39 percent of fraud being perpetrated by internal actors emerging from this band.
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.
More than half (56 percent) of South African respondents say that top management would rather allow a business transaction to fail than have to use bribery. Fifteen percent of respondents that hailed from mainly the private sector organisations had been asked to pay a bribe in the past two years, and another 12% believe they lost an opportunity to a competitor that may have paid a bribe. More than half of South African respondents believe it is ‘likely’ that they will experience bribery and corruption in the next two years.
Poor data quality and skills shortages are undermining the efficacy of AML systems. Only 50 percent of money laundering and terrorist-financing incidents in financial services organisations were detected by system alerts. One in three South African organisations experienced difficulty in sourcing personnel with skills in the areas of anti-money laundering/combating the financing of terrorism. More than a third of financial services respondents that have undergone inspections by regulators had to address major findings.
Overall, the report finds that business detection and response plans are not keeping pace with the level and range of threats now facing organisations, with a potential trend of too much being left to chance.
Trevor White, partner, Forensic Services and Global Survey Leader, PwC said: “While it is a positive sign that there has been increased detection by means of whistleblowing hotlines, far too much, is being left to chance by organisations – economic crimes discovered by accident more than doubled from six percent in 2014 to 14 percent in 2016. Another eight percent of survey respondents could not even tell us how serious economic crimes against their organisations were detected.”
“With a greater focus in recent years on the responsibility of management and boards insofar as good corporate governance practices are concerned, ignorance of matters affecting your company, and in particular a passive approach to detecting and preventing economic crime – is an open invitation for disaster, not only from a corporate perspective but on a personal level as well.”
Visa Inc. (NYSE: V) (http://www.Visa.com), a global payment company, today announced its intention to open an office in Côte d’Ivoire to reinforce its position as a leading payments technology company and to help bringing the benefits of electronic payments to the economy and a broader range of consumers and merchants across the region.
Visa is currently in the process to finalizing the procedures leading to the opening of its office in Côte d’Ivoire. This will facilitate the engagement with key stakeholders in the region; government, financial institutions, consumers and merchants in the ECOWAS region.
This important development will help drive the company ‘strategy in Africa where two billion people live without access to financial services, according to the Global Financial Inclusion Index 2014. The expansion signals continued efforts by Visa to drive its undertaking with the World Bank Group to achieve universal financial access and providing electronic payment accounts to 500 million underserved people by end of 2020.
H.E. Koné Adama, Minister of Finance expressed his support to plans shared by Visa and said, “This is indeed great news, it will help Côte d’Ivoire in its endeavors to promote electronic payments in the country and drive financial inclusion to the benefit of the overall economy.”
H.E Jean-Louis Billon, Minister of Commerce, indicated, “This is encouraging news for 2016, Côte d’Ivoire is currently exerting significant efforts in attracting foreign direct investments and facilitate commerce and electronic payment will help in increasing the transparency of the economy to that end. Visa is welcome to the region”.
H.E. Roger Kacou, Minister of Tourism, said, “We are pleased with the plans shared by Visa and it will definitely help in attracting tourists to visit Côte d’Ivoire and we look forward to our partnership with Visa to execute campaigns that would result in the promotion of the country as a destination of choice for tourists.”
Visa has always been driven to extend the reach and value of electronic payments in ways that can empower new forms of commerce. The company will partner with the government and the clients to support the electronification of payments plans, engage in financial literacy activities, and provide solutions to increase the mobile-based payments in the region. Supporting the electronification of payments in Africa will contribute to the financial integrity of the financial transactions in the continent eyeing more foreign investments and will help increase the transparency of its monetary systems aiming at fostering economic development.
“Our presence in Côte d’Ivoire reflects the growing importance of the UEMOA region which represents 40% of the collective GDP of the Economy of West African States. It showcase, both, our commitment and enthusiasm to help the Francophone African markets as they migrate from cash to digital payments to provide consumers across socio-economic groups with secure, convenient, and reliable payment options.” said Tarek Elhousseiny, General Manager of North and Francophone Africa at Visa. “We plan to proactively work with the governments and partner banks across the region to roll out initiatives that are focused on financial inclusion and help consumers realize the full potential of electronic payments while expanding the technology and global expertise that would support economic growth plans in the region.
“The decision to have a permanent presence in Côte d’Ivoire will enable Visa to better serve its partner banks and focus efforts on projects that would help accelerate financial inclusion in Francophone West Africa. We have collaborated with 47 governments to provide more than 5000 products and solutions to help financial inclusion efforts globally. These products and services enable governments to reach more people and enhance the quality of services offered to them.” said Ismahill Diaby, West Africa Manager at Visa.
— Mar 1, 2016 @ 13:10 GMT
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