Fraud is up on continent

This was revealed by the KPMG inaugural Africa Fraud Barometer. The study, released yesterday, is a first effort to measure fraud in Africa and expose the risk of fraud for companies in their day-to-day operations. According to the study, reported fraud cases increased from 355 in the first half of 2011 to 520 cases in the second half of the year. Over the same period the value of fraud decreased from US $7.17-billion to $3.702 billion.

KPMG developed the Africa Fraud Barometer to form a bigger picture of fraud on the continent. "We felt there was a need to create the Africa Fraud Barometer since the world has begun to look at Africa as a new investment destination," says Petrus Marais, pictured, KPMG's global leader in forensics who developed the barometer. "We are still dealing with a negative perception of Africa. As risk analysts we want to provide information that allows potential investors to assess and conceptualise risk on the African continent," he says.

The barometer distinguishes between the number of reported fraud cases, type of perpetrator, victims of fraud, types of fraud, countries and targeted industries. The data is for 2011. To obtain some indication of trends, KPMG compared findings from the first six months to those in the second half of 2011. Accounting for 29% of perpetrators, company employees committed the most fraud in the second half of 2011, according to the report.

Hardest hit is the government and the public, with 39% of all cases, 5% lower than in the first half of 2011. "Fraud occurs most where money enters and exits a company or institution. At the interface of financial transactions, perpetrators tend to be most successful in defrauding funds," Marais says.

General fraud was the highest reported fraud at 29% while misappropriation and theft came second. The countries with the highest number of reported fraud cases on the continent were South Africa and Nigeria, but in both countries fewer cases were reported in the second half of 2011.

Zimbabwe had the highest value of fraud perpetrated in the second half of 2011, amounting to over US$1.2-billion.

Source: Sowetan