South Africa reports the highest economic crime rate in the world, says PwC

Global professional services firm PwC has released its biennial Global Economic Crime and Fraud Survey, and South Africa has emerged at the top of the list for the ten countries with the most economic crime in the world. The country’s rate of reported economic crime stands above 75%: well above the global average of just under 50%. 

In financial terms, South Africa has been in the news for all the wrong reasons over the last year. The country’s economic outlook has not been particularly positive, which is a struggle in itself. However, the country’s market has been rocked by one scandal after the other, often involving the biggest firms in the country’s industrial landscape, and extending to the highest political ranks.

Last year, the country was first rocked by the Gupta scandal, which revolved around the illegal extraction of R1.6 billion from a local power company by the name of Eskom, as a joint effort between South African consulting firm Trillian and global management consultancy McKinsey & Company.

Trillian is controlled by the Gupta family, and is the former employer of former President Jacob Zuma’s son Duduzane, demonstrating the level of permeation of economic crime in the country. The scandal saw McKinsey being dropped by several clients, first by Standard Bank and Absa, then by Nedbank, and subsequently by CocaCola and Sasol.  

Later that year, South Africa’s largest retail firm, Steinhoff International, was involved in the biggest accounting scandal in the country’s history, with over $6 billion in assets being reported under suspicious conditions. The firm has since had to restructure and revamp its senior leadership.

It comes as no surprise, therefore, that South Africa has topped the global list for countries with the most economic crime, published in a report by Big Four accounting and advisory firm PwC. According to the firm’s analysis, the rate of reported economic crime in South Africa stands at 77%, compared to the global average of 49%.

Kenya emerged in second place in the report, with a rate of 75%, which explains the fact that Africa topped the list of economic crime rates when classified by region. France was in third place with a rate of 71%, while the Russian Federation came in fourth with a rate of 66%. The tope five was rounded off by Uganda, also at 66%.

The report is based on a survey conducted among organisations, which revealed some other upsetting results. Of the organisations surveyed in South Africa, 69% reported that they had been the victim of an economic crime in the last two years, which displays an extremely high level of permeation across industries, particularly when compared to the global figure of 36%.

In addition, South African organisations decidedly lack faith in the local authorities, with 70% of the organisations stating that the country’s law-enforcement mechanisms were ill-equipped to deal with economic crime. This might have to do with the 32% reporting rate of cyber-crime; which requires substantial infrastructure to prevent and investigate.

Trevor White, a Partner at PwC and Leader of the firm’s Forensic Services and Global Surveys attributes the high rates to lack of awareness, stating; “With a greater focus in recent years on the responsibility of management and boards insofar as good corporate governance practices are concerned, ignorance of matters affecting your company, and in particular a passive approach to detecting and preventing economic crime – is an open invitation for disaster, not only from a corporate perspective but on a personal level as well.”