BANKING NEWS
On the positive side, I have learnt
that recently, there has been
a greater willingness by
governments in Africa
to address fraud.
Data currently available captures the entire year of 2011.
Hardest hit by fraud are government and the public sector.
‘Fraud occurs most where money enters and exits a company
or institution,’ says Marais.
The African countries with the highest number of reported
cases of fraud are South Africa and Nigeria. Zimbabwe has the
highest value of fraud perpetrated in the second half of 2011,
amounting to over US$1.2 billion.
KPMG compiled data by accessing and analysing all available
news articles and designated databases. The data will be
disseminated in a press release every six months. ‘Over time,
we expect to get a clearer picture about the different types of
fraud committed, which will allow us to propose to our clients
various types of measures against fraud,’ says Marais.
‘On the positive side, I have learnt that recently, there has
been a greater willingness by governments in Africa to address
fraud. That is particularly the case in South Africa.’
Ernst & Young’s 2012 Global Fraud Survey, Growing Beyond:
a place for integrity, shows that 15% of senior executives polled
at leading companies around the world are willing to make cash
payments to win or retain business, up from 9% in 2010.
More than 1 700 executives across 43 countries were surveyed
for their views of fraud, bribery and corruption. Companies in
South Africa, Kenya, Namibia and Nigeria formed part of the
respondent base.
Over a third of the global respondents believe corruption is
widespread in their country, and the situation is significantly
worse in rapid-growth markets like Brazil (84%), Nigeria (72%),
Turkey (52%) and South Africa (64%).
On the positive side, the survey clearly shows that African
respondents are committed to combating corruption, with the
processes in place to monitor anti-bribery compliance broadly
on a par with (or even higher than) those in the rest of the world.
Africans also show a keen appetite for increased supervision
by regulators (72% in South Africa as compared with 69%
globally) and strong support for ‘bounties’ for whistle-blowers.
Seventy-eight percent of South African respondents (79% in
Africa overall) would support such a scheme, compared with
52% globally.
BOARDS UNDER PRESSURE
Boards are held responsible by regulators and shareholders
for addressing the challenges of corruption and anti-bribery.
But globally, a substantial minority of respondents believe that,
while management strongly communicated its commitment to
anti-corruption policies, breaches were not penalised.
‘This is an area in which South Africa performs significantly
better than the global average,’ Van Rooyen notes. ‘In South
Africa, 62% of respondents said that breaches of anti-bribery
and anti-corruption policies were penalised, as against 45%
globally. Africa as a whole was even higher at 68%.’
Many businesses are also exposed to additional risk, having
failed to conduct appropriate anti-corruption due diligence
before and after acquisitions. For US-based companies, this
type of due diligence is the norm: 84% either always or very
frequently conduct it pre-acquisition. Elsewhere the frequency
is much lower (32% in China, 9% in Nigeria).
Here again, South Africa compares favourably, with 73% of
South African companies frequently or always conducting due
diligence prior to an acquisition.
‘In the fight against fraud and corruption, South Africa faces
a specific challenge: while 60% of respondents believed that
authorities were relatively willing to prosecute bribery and
corruption cases, only 16% saw these prosecution efforts as
effective. These perceptions are mirrored across the African
region as a whole, but are significantly at variance with the
rest of the world,’ Van Rooyen concludes. ‘Our belief is that
businesses with major operations in Africa would be likely to
benefit from participation in initiatives for collective action that
are beginning to show potential for combating fraud, bribery
and corruption.’ ■
To view the surveys in full, see kpmg.co.za and www.ey.com.
Edition 2
SA BANKER
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