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04 November 2012 at 17:40 - Posted by Midrand

Africa is the worst region for fraud - SANEWS


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AFRICA has retained its position as the region with the largest fraud problem, according to the 2011/12 Kroll Global Fraud Report.

Such a situation hits companies in the pocket, with lower revenues and fewer investment opportunities.

The report, based on a survey of senior executives in July and August by global risk management firm Kroll Advisory Solutions, found a decrease of eight percentage points (to 77%) in fraud prevalence in the region, but this was less marked than in other regions.

"Over 40% of respondents identified their operations in Africa as moderately or highly vulnerable to the threats of internal financial fraud, corruption and bribery, and information theft," said Kroll directors Alexander Booth and Melvin Glapion.

"The numbers probably say more about what business people are thinking than about the true scale of the problem, but the message is clear: fraud in Africa is a pervasive issue."

Glapion and Booth found the threat of fraud was moving from the physical to the technological realm: in the past year 32% of companies had assets or physical stock stolen, a lower figure than last year. But 34% suffered from information theft and 11% had intellectual property stolen - a significant increase on the previous year.

"Much of the information loss occurred through the theft of devices, such as hard drives, or the compromising of IT systems."

And much of it was internal, with perpetrators mostly operating from the lower ranks of the company. The survey found that junior employees were key players in 56% of fraud suffered by African companies.

* This article was first published in Sunday Times: Business Times

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