White-collar crime is currently costing the South African economy upward of R40-billion a year, Stallion Security and its division Stallion Investigations said in a statement on Tuesday.
Stallion Investigations MD Geoff Midlane said there is hard evidence to show that corporate crime is siphoning off more money from the economy than was brought in by foreign tourism, estimated at R32-billion for last year.
”There is no question that it is a very serious problem. Apart from bleeding the economy dry, it is frightening off foreign investors who prefer to invest in countries with lower corporate crime rates,” he said.
One possible solution is for the private sector to become more involved in fighting white-collar crime, Midlane said.
He believes the country needs more and better-trained commercial crime specialists in the South African Police Service. It is also incumbent upon the private sector to assist the police wherever possible, he added.
Stallion Security has grouped together some of the top forensic specialists and specialised fraud investigators to tackle the problem head-on.
These specialists are drawn from a wide variety of disciplines, including forensic accounting, polygraphing (lie detection), handwriting analysis, information technology, credentials verification, electronic surveillance, the placing of agents and debugging.
Midlane said a recent KPMG fraud survey, which for the first time included the public sector, detected a massive 13% leap in employee fraud reported since the last survey in 1999.
”Every single one of our clients is reporting figures much higher than this and it was for that reason that we established a separate division within the Stallion Security organisation to address the problem,” he noted.
Midlane said Stallion’s experience has shown that as much as 70% of employees in some businesses act dishonestly, often leading to the demise of their companies.
”The only way to slow down the spiral of theft crippling many companies is to act pro-actively,” he noted.
”The pro-active approach creates an atmosphere that discourages corruption and helps to identify and measure both the extent and likelihood of threats that may be faced.”
He said unless the problem is addressed with great urgency and speed, many companies will be staring bankruptcy in the face.
He added that the typical white-collar criminal is between 26 and 40 years old, has a tertiary qualification and is hard working. Such criminals are generally egocentric and big spenders, and work for their employers for longer than five years before they start embezzling money.
”It has been our experience that drugs or alcohol often played a role and fraudsters were often involved in extra-marital affairs,” he said.
Alice Maree of Unisa’s faculty of criminology concurs with Midlane, adding that unpaid debts are often the catalyst that leads to corporate fraud.
She said the typical white-collar criminal has no previous criminal record and is a seemingly stable individual. They crave recognition and are emotionally unsure of themselves.
Midlane said one particular trait that corporate criminals have in common is that they seldom take leave.
He said under-reporting of serious economic crimes means that well in excess of 80% of South African businesses are the victims of serious economic crimes.
”A recent PriceWaterhouse survey indicated that more than 70% of South African firms reported criminal activity but, given the well-known under-reporting rate, we can be safe in assuming that the real figure is over 80%,” he continued. — I-Net Bridge