02 December 2005
	Corporate crime SURVEY FINDS IT'S ROUGH AT THE TOP By Razina Munshi

More than half of all company fraudsters in SA are senior and middle managers, and half the perpetrators do it at their own companies, according to the 2005 PricewaterhouseCoopers (PwC) global economic crime survey. A hundred SA companies took part in the survey, which included 34 countries. The biennial survey shows a 17% increase in commercial crime in SA since 2003. The rise is partly attributable to better vigilance - though a third of the thefts were detected by chance. Most perpetrators - 54% - commit fraud to maintain expensive lifestyles. Insufficient controls account for 36%. More than half believe they aren't doing anything wrong. "Fraudsters operating within a company have a strong understanding of the business, including the strengths and weaknesses of the controls in place to prevent fraud," says PwC forensic services leader Louis Strydom. Some - 25% of senior managers - escape with just a warning. Lowlier employees have a greater chance of being dismissed or facing criminal charges. "A worrying trend is that fraudsters in senior management are not only dismissed less frequently than other grades of staff, but are also prosecuted less frequently," says Strydom. This does little to deter others. Among senior managers, 73% were not sentenced, compared with 56% of middle managers and 47% of other employees. The survey found over 80% of SA companies have fallen victim to fraud in the past two years, and 15% lost between R6,5m and R65m. They experienced an average of 11 incidents each. The global average was eight. The typical thief (80%) was a male between the ages of 31 and 40. Misappropriation of assets actually fell from 79% to 72%. Fraud through false pretences came in at 61% and financial misrepresentation leapt from 5% in 2003 to 45%. In 83% of cases, firms conducted an internal investigation after detecting fraud; the police were brought in in 78% of cases. "The financial losses suffered by companies as a result of these tangible crimes may, however, be the tip of the iceberg; the collateral damage' could also be substantial," says Strydom.