AIG Advises on Business Crime

Fraud is SA's numer 1 financial crime Almost three quarters of SA businesses have experienced fraud, as opposed to just over 40% around the rest of the world

Local and global figures regarding business crime are truly staggering. It was recently shown that an incredible 7% of company revenue is lost to fraud on a global scale, and that fraud is the number one money spinner - even outdoing drug running!

South Africa is, unfortunately, also part of the equation and employee fraud in the country is on the rise.

"In South Africa, the criminal justice system is still evolving," said Philip Hobson, the Financial Lines Manager of AIG South Africa, "lenient penalties are not acting as an appropriate deterrent, and criminals are getting more sophisticated. Add to this current economic pressures and the climate is ripe for fraud perpetrators."

According to AIG, fraud is South Africa's number one financial crime, with 72% of all companies falling prey to this type of felon - compared to the average 43% of companies around the world.

"Executives are often unwilling to accept that fraud will happen in their company," noted Hobson, "but no company is immune to fraud. Generally, weaknesses in internal control are the main contributing factor to crime in the workplace."

To prevent this type of business crime, AIG advises companies to take action through a number of steps.

One of them is to implement a fraud prevention policy as well as a fraud response plan. Employees should be given the opportunity to report suspicious information confidentially so as to encourage better awareness.

In addition, strong emphasis should be put on powerful internal control systems and internal audit as these tools are seen as the ultimate weapons to prevent and fight this type of crime.