The chairperson of an ad hoc committee on corporate governance on Monday expressed concern at the poor state of workplace ethics in South Africa at present.
Ruling African National Congress Member of Parliament Barbara Hogan — a former chairperson of the National Assembly finance portfolio committee and now chairperson of the joint ad hoc committee on corporate governance — noted a report from Jacques Marnewicke of Business Unity South Africa (Busa) indicating a growth in economic crimes in South Africa’s business environment. Hogan said: “We don’t have a healthy ethical environment [in business] at the moment.”
Marnewicke, in a presentation to the committee, reported that 68% of 237 companies surveyed in a 2005 KPMG questionnaire — part of a larger African continent wide fraud and misconduct survey — expected an increase in fraud going forward while 64% considered fraud a major problem. He noted that the definition of fraud was a broad one and included economic crimes of various kinds, including bribery and corruption.
Referring to a business ethics South Africa survey conducted in 2002 on behalf of Busa — the merger of the Black Business Council and the Business South Africa — among 53 JSE listed companies with 800Â 000 employees involving 421 telephonic interviews, he said that it had been found that internal communication of ethics policies by top management was “not at an acceptable level”.
There was also inadequate ethics education and training as well as poor maintenance of a theft-free environment. The latter problem particularly effected big organisations “in large buildings” which were not only the target of internal crime by also targeted by syndicates. The theft of laptops and cell phones was a key concern in these environments.
It was also found in this survey that 25% of management and 33% of staff were not aware of codes of ethics in the workplace and that whistle-blowing hotlines were established in less than 50% of companies.
He also noted that the recent PriceWaterhouseCoopers (PWC) survey — released recently — showed that 83% of companies were subjected to economic crime among the 100 top companies surveyed, 60% of which were listed on the JSE Securities Exchange.
Marnewicke acknowledged Hogan’s concerns but indicated that the crime problem in corporate entities could not be seen in isolation from the broader problem of crime in South Africa. “We are not immune to that,” he said.
He said it was unfortunate that white-collar crime was often seen as a “victimless crime” with perpetrators facing lenient sanctions. However, he believed there was a move away from plea bargains with individuals — allowing, for example, stolen funds to be returned in exchange for no jail sentence. Companies were instead taking the losses and insisting on justice against perpetrators.
There was also a move for companies not to take responsibility for individuals involved in crime — but to allow that person to face the consequences of their action.
Marnewicke also made the point — underscored by the PWC — that there was now greater willingness to report economic crimes by corporates. -I-Net Bridge