In South Africa, the perception exists that not only violent, interpersonal street crimes have increased in recent years, but ‘white-collar’ crimes and corruption are also rife in its private and public institutions. Although white-collar crimes do not receive the focus accorded to other crimes, there is heightened concern which is believed to be costing the country billions.
Although there is no official definition for white-collar crime, the National Crime Information Management Centre of the South African Police Services describes white-collar crime as "an umbrella concept used to refer to a whole host of activities such as fraud, embezzlement, tax evasion, bribery, insider trading, ‘kick-backs’ and corruption”.
According to a report issued by the SA Human Rights Commission released earlier this year, white-collar crimes are rampant and impact negatively on South African citizens’ rights.The report says that the scourge of crime in South Africa is by no means limited to violent crime.
"The moral decay also manifests itself in the proliferation of crimes being committed in the business sector,” the report said. This contributes to the denial and limitation of rights of South African citizens and, of concern, is the ‘relative impunity’ with which these white collar crimes are being committed.The report said that the recent anti-competitive behaviour, uncovered in the bread price fixing scandal, should not be characterised as a "more civilised form of illegal corporate activity”.
"Especially when dealing with basic commodities like bread, one cannot separate the illegal activities of companies from their impact on the economic and social rights of the communities who comprise their customer base and from whom they derive their profit.”
The SAPS claims that, in general, official crime statistics represent less than 10 % of the incidence of actual crimes, with 51 % of all crimes not being reported at all.Because of their nature–secretive, sophisticated, with victims often unaware that they are being victimised – commercial crimes are open to even wider discrepancies in reporting and recording.In a recent study on fraud awareness by KPMG, a mere 20 % of the respondents reported fraud to the police, indicating that 80 % of detected fraudulent activity went unrecorded.
Other research in South Africa indicates that 79 % of respondents experienced fraud recently and 90 % perceived fraud to be increasing.Compared with the 98 % of New Zealand business respondents who thought fraud was a concern, only 41 % perceived fraud to be increasing.This is largely due to the fact that proactive steps have been taken in New Zealand to address fraud, whereas in South Africa very few preventive measures are in place, resulting in the pessimistic view that fraud will increase.In addition, there are some uniquely South African risk factors which should be considered in order to explain the fact that white-collar crime is a problem at present and perceived to be at risk of increasing.
Advocate Steven Powell, a forensic specialist from ENS Forensics, says that white-collar crime is costing the economy R150 billion a year, most of which is undetected and unreported.Powell is of the opinion that employers must take a more proactive approach to combat fraud and corruption, now more than ever.He says that in 80 % of fraud and corruption cases, the culprits worked for the companies from which they stole from.
South Africa is certainly at risk on the bases of political uncertainty, current pressing economic conditions and the increasingly organised and sophisticated nature of white-collar criminals.Stiaan Klue, the chief executive of the South African Institute of Tax Practitioners, says that tax fraud is known to occur when general insecurity pervades and difficult economic conditions exist, which give rise to redundancies.Klue is concerned that the current economic crisis may cause entrepreneurs and small businesses in South Africa to try and ‘protect what they already have’, and no doubt will increase incidences of non-compliance with tax legislation."In order to survive, small businesses may seek to feather their own nest, albeit through illegal means.For small business owners, when non-compliance is weighed up against the actual fear and the likelihood of being detected, the urge to survive and to protect what they already have, may prove stronger,” Klue says.
Electronic fraud has become one of the most prevalent types of fraud.There is an increase in computer related crime which requires businesses, security personnel and law enforcement to ensure that proper systems and controls are in place to combat fraud.
The White-collar Crime Conference held in Johannesburg in November 2008 highlighted some of the major issues relating to whitecollar crime in South Africa.Klue is hopeful that this will increase corporate awareness of white-collar crime and their duty to prevent this from having an impact on the already fragile SA economy.
Source: By Stiaan Klue (TaxTALK)