1410 investigating the impact of fraud & corruption on economic development

Investigating the Impact of Fraud and Corruption on Economic Development

Jenny Reid

Director

Definition of Corruption

Corruption has been described “as the abuse of public office for private gain.”

Is corruption limited to public office?

Economic Impact of Corruption

Corruption is the abuse of entrusted power for private gain. It hurts everyone who depends on the integrity of

people in a position of authority.

Economic Impact of Corruption

Corrupt activity • Hinders development, • Contributes to the depletion of

the budget,• Distorts markets, • Hinders local & foreign

investment.

Economic Impact of Corruption

Corrupt activity • Interrupts investment – 20% more

expensive to invest in a corrupt country

• Restricts trade• Reduces Economic Growth• Increases Poverty• Hinders job creation

Economic Crime is a Global Concern69% of respondents to a survey in 2014 indicated they had been a victim of some economic crime in

the past 24%

Typical organisation loses 5% of revenue to fraud

Global fraud = $3.7 trillion

Lack of Integrity

Bad Attitude

Perception of not being caught

Dissatisfied Employees

Personal Insecurity

Bad Governance

Human Greed

Causes of Internal Fraud & Corruption

Most Common Categories of Fraud

Asset Misappropriation

– 85%

Corruption – 37%

Financial Statement fraud

– 9%

Fraud

Owners / Executives19% of cases

Average loss - $500 000

Employees42% of cases

Average loss - $75 000

Managers36% of cases

Average loss - $130 000

4+ peopleAverage loss - $500 000

Single personAverage loss - $80 000

2 peopleAverage loss - $200 000

3 peopleAverage loss - $355 000

Accounting

Operations

Sales

Executives

Customer Service

Procurement

Finance

Common Denominator

RED FLAGS

Rising costs of goods & srevices

Slow delivery / Poor Performance

Rapidly increasing number of orders / Excessive orders

Manipulation of tender scheme

Paying above average prices

Last bidder always wins the tender

FRAUD PREVENTION DATABASE

Existing employees /

Students

Past employees /

Students

Outsourced / temporary employees

Key personnel in

suppliers

Potentials employees /

Students

Industry Database

FraudPreventionDatabase

WHAT DOES A BAD HIRE COST YOUR COMPANY?

Third Party Risk

Temporary Staff

Outsourced Labour

SuppliersClients

Contractors

Is this happening in your organisation?

Jenny Reid+27 82 600 8225jenny@ifacts.co.zawww.ifacts.co.za