South African economic crime reaches “pandemic” level, survey finds

2 Mar 16

Economic crime is at a “pandemic level” in South Africa and both France and the UK have reported significant increases in its frequency over the past two years, according to PwC.

While the overall rate of economic crime, including cybercrime, bribery and corruption and money laundering, has fallen marginally for the first time since the financial crisis, Africa, Western Europe and the Middle East have all seen increases, with governments and state-owned organisations the second-biggest target.

Louis Strydom, forensic services leader for PwC Africa, said in South Africa in particular, where more than two in three organisations (69%) report falling victim to some kind of economic crime in the past two years, economic crime “remains a serious challenge” to government officials, business leaders and private individuals.

“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.”

Respondents to PwC’s Global Economic Crime Survey in France and the UK also recorded a 25% increase in the rate of economic crime.

“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,” added Strydom.

The region with the highest rate of economic crime is Africa (57%), followed by Western Europe (40%), North America (37%), Eastern Europe (33%), Asia Pacific (30%), Latin America (28%) and the Middle East (25%).

PwC’s report warned that the marginal decrease in global economic crime might actually be masking a more concerning trend – that economic crime is changing and detection and control programmes are not keeping pace. The report’s finding indicates that one in ten economic crimes is discovered only by accident.

Trevor White, partner and forensic services and global survey leader at PwC, said organisations are leaving far too much to chance – “an open invitation for disaster”.

Of those that are discovered, the most commonly reported type of economic crime is asset misappropriation, at 64%, followed by cybercrime (32%) and bribery and corruption (24%).

Nearly a quarter (22%) of respondents experienced losses of between $100,000 and $1m due to economic crime, but 1%, primarily from North America and Asia Pacific, said they had lost in excess of $100m.

More than half of respondents in a number of countries also felt their law enforcement agencies were not adequately prepared to combat economic crime, including South Africa, Australia, the US and France.

Over 6,300 respondents across 115 countries took part in the survey, with 70% of them working in finance management, audit, compliance and risk management. 

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