Looking through a magnifying glass at white-collar crime

The International Association of Certified Fraud Examiners had recently found that businesses are losing an average of 5% of their yearly turnover due to dishonesty and white-collar crime.  This confirms that no business is excluded from the risk of losses due to white-collar crime.  If one looks at the fraud triangle as to why people commit crime, many of our people are under severe financial strain and pressure due to South Africa’s weak economy, unemployment and various other factors.

Offenders at first rationalise the reason for their dishonesty, from abusing company assets to actually stealing money or other assets, with various excuses such as, “I need to feed my family”, etc.  After a while it becomes easier to rationalise the reason for the dishonesty and people continue with their actions due to greed.  This is quite prevalent in businesses that do not necessarily have good checks and balances in place, like segregation of duties.

Here are a few red flags that have been identified from known fraud cases:

  • Living beyond means
  • Financial difficulties
  • Unusually close relationship with supplier / customer
  • Control issues / unwillingness to share duties
  • “Wheeler-Dealer” attitude
  • Divorce / family problems
  • Irritability, suspiciousness or defensiveness
  • Addiction problems
  • Complain about inadequate pay
  • Most are first-time offenders
  • Lack of internal controls
  • Override in existing controls

In a recent survey by the ACFE they found that whistleblowing is not only central to our constitutional principles but it is key in the fight against corruption and mismanagement, especially of public funds, and to strengthening transparency and accountability within organisations and society more generally.  42% of offences were discovered by means of whistleblowing and 16% by management review which followed whistleblowing.

We believe prevention is better than cure and for this reason we have developed an Integrated Risk Management Solution (IRMS) to assist businesses of all sizes to minimise risk.  This solution ranges from network security / integrity to physical risk assessments and an affordable, anonymous whistleblowing App than can be managed by the businesses themselves or a third party.  The whistleblowing is not limited to criminal offences but can include issues like intimidation, staff wellness, etc.

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