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Employees are the chief culprits when it comes to defrauding companies and other organisations. What is more, this unhealthy trend is growing rapidly throughout Southern Africa. Fraud perpetrated by employees is responsible for the biggest financial losses suffered by organisations. This alarming revelation was made by the international professional services firm, KPMG in its latest survey on fraud.

The study, conducted in South and Southern Africa, and which for the first time includes public sector organisations, shows that employee fraud now stands at 88%, which is up an alarming 13% from the firm's 1999 study.

"Recent years have seen fraud grow in quantum and sophistication. The increasing complexity of financial structures and the intensity of business competition has made it more tempting to commit fraud and also more difficult to detect," says KPMG Forensic managing partner Petrus Marais.

Bosses interviewed in the survey said that fraud is still a major problem in their organisations and that it will remain a problem in the future. Most of them believe that fraud will increase in the future, due to economic pressures, lack of adequate penalties and law enforcement.

"However," says Marais, "organisations can manage this challenge improving their internal controls to reduce the possibility of fraud."

Among the controls which are a critical part of detecting and combating fraud, is the role of the inside informant or 'whistle-blower'. The whistleblower is one of the most effective ways of combating employee fraud. But what happens when someone blows the whistle on the whistleblower himself? This is where legislation comes in. "Considered to be amongst the best in the world, South Africa's legislation appears to be paying off," he says.

A similar survey was conducted early this year in Tanzania, Kenya and Uganda.

Tom Nevin

Copyright International Communications Sep 2002
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