What are the types of white-collar crime in South Africa, what challenges are faced in combatting fraud, and how can this debilitating issue be addressed?
Typical types of fraud can be categorised as follows:
Fraud: Financial or tax fraud.
Embezzlement: Misappropriated funds or assets by people entrusted with them.
Corruption: An abuse of power through bribery and kickbacks.
Money Laundering: Often linked to organised crime, the concealment of illegally gained funds.
Cybercrime: Crimes enabled by technology such as online fraud and identity theft.
We hear about the need to eradicate fraud, but this is easier said than done as several weighty challenges frustrate agencies tasked with this such as:
Underreporting: The scale of fraud is unknown.
Technological Sophistication: South Africa’s skill shortage is a steep hurdle, and this inhibits SAPS.
Focus: The extent of public sector corruption and violent crime dilutes investigation of white-collar crime in the private sector.
Given the challenges and issues faced, what can the private sector do better to manage fraud?
Employee Screening: Identify and prevent criminals or potential criminals from entering the company.
Whistleblower Policy: Put a clear and understood policy in place which protects whistleblowers from victimisation and risk.
Communication: Make employees aware of how fraud can occur in their areas and highlight the damage this can have on the company’s reputation and financial position.
Corporate Governance: Strengthen corporate governance structures, prioritising transparency and accountability. Make sure that directors and managers understand legislation, especially being aware of fraud but not acting on it.
While government agencies are stretched to manage white-collar fraud, there are steps that the private sector can take to reduce their risk. Treat your company the same way that you treat your home: ensure that your neighbour’s home is a softer and higher risk target than yours!
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Equally effective in the public and private sectors, Mubesko is a consulting practice offering financial accounting support and management solutions, asset accounting and modelling, and forensic services.