South Africa remains at the top of PwC global crime list

Organisations in SA not only report a higher frequency of crime compared with global peers but also exhibit significantly less confidence in law enforcement, while also experiencing financial losses in some areas twice those of their peers, professional services firm PriceWaterhouseCoopers (PwC) said on Tuesday.

The 2016 edition of PwC’s Global Economic Crime Survey has once again placed South African firms at the top of the unenviable.

The survey came with warnings over the growing prevalence and sophistication of cybercrime. PwC warned that only 29% of company boards in SA said they requested frequent reports on capacity to deal with such incidents, calling for a more proactive approach to this issue as well to corporate governance in general.

Globally, PwC surveyed more than 6,000 firms for its survey. Of the 232 South African respondents, 83% were in the private sector. Asset misappropriation was the most prevalent form of crime reported, followed by fraud and bribery.

While SA remained at the top of the list, new entrants in the top 10 were France and the UK. This was attributable to the continuing prevalence of cybercrime, PWC SA partner in forensic services Trevor White said at a briefing in Johannesburg.

A total of 69% of South African respondents reported some economic crime over the past two years — the same as the 2014 survey. About 68% of respondents from France reported the same in a country that was not in the top 10 in 2014.

Of respondents in SA, 2% lost $100m or more in the past two years; the figure was 1% globally. About 10% lost between $5m and $100m.

Modest drops in other types of crime were reported, outweighed largely by the increasing prevalence of cybercrime. Procurement fraud decreased from 59% to 41% over the period. Cybercrime was increasingly branching out to all industries, whereas in the past it focused on the financial sector, PwC SA’s associate director for cybercrime and forensics technology Junaid Amra said.

PwC Africa forensic services leader Louis Strydom said that after a cyberattack occurred, many organisations were more focused on bringing systems back online than investigating. There was with an increasing prevalence of “multivector attacks”, both to probe capacity and to scale up levels of theft.

For the first time fraud by external actors exceeded internal fraud. Despite this there was concern that such fraud — including that of cybercrime — was becoming increasingly sophisticated. This meant existing controls, such as whistle-blowing, risked becoming less effective.

“We have all sorts of legislation that says we are going to protect whistleblowers. In reality, it is all to easy to get rid of a whistleblower in an organisation,” said Mr White.

Corruption Watch executive director David Lewis said yesterday that despite the strengthening of regulations to protect whistleblowing, it did not go far enough. It was also extremely difficult to protect whistleblowers once fired, including proving victimisation, he said.

In terms of deterrence, a key issue remained a distinct lack of success in prosecuting white-collar crime. “Our prosecutorial authority and policing authority are woefully under-resourced. It is also partly because they themselves have been incredibly compromised by political interference and all that suggests,” he said.

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