Nigeria, S’Africa, Kenya top fraud cases in Africa –KPMG

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Nigeria, Kenya, Zimbabwe and South Africa make up 74 per cent of all fraud cases reported in Africa, KPMG has said in a report released yesterday. According to the Africa Fraud Barometer prepared by KPMG, a global network of professional firms providing audit, advisory and tax services, while fewer cases of fraud are reported in South Africa, the overall value of these cases is far greater in Nigeria.
The Africa Fraud Barometer has been developed to provide a bigger picture of fraud prevalence on the African continent.
Though the cases of fraud decreased from 520 in the second half of 2011 to 503 cases in the first half of 2012, the value of fraud decreased from $3.3bn to $2bn, the report said.
The KPMG’s Global Leader of Forensics, Mr. Petrus Marais, who developed the barometer, said: “This is only the second barometer we are publishing, but we have noticed a decline both in terms of reported fraud cases and their monetary value. We see this as a positive trend, there is an increasing interest in Africa as an investment destination, but the continent struggles with a rather negative image.
“We are providing an analysis of fraud profiles in individual African countries to foreign investors since a generic approach to assessing fraud risks on the continent is not possible. The overriding point is that investors need to assess the prevailing environment in each country.”
According to him, the Barometer distinguishes between the number of reported fraud cases, type of perpetrators, victims of fraud, type of fraud, countries and targeted industries.
He said that data currently available captures the entire year of 2011 and the first half of 2012. To obtain some indications of trends, findings from the first six months of 2012 were compared to those ones of the second half of 2011.
“This updated KPMG Fraud Barometer shows that fraud and misrepresentation had the highest reported cases at 37 per cent, a decrease of 10 per cent from the previous six months.
Most fraud is committed by government officials (18 per cent), followed by business people (15 per cent) and employees (14 per cent),” he added.
Marais stressed that government at 38 per cent is still hardest hit by fraud and corruption, an increase of one per cent.
The report stated that in the private sector, multinationals are increasingly exploring ways of addressing internal fraudulent activities.
The KPMG’s East Africa Director responsible for Forensic Services, Mr. William Oelofse, said that since international and local legislation has been put into place, the consequences for companies are far greater than ever before.
“In the East African region, Kenya in standing out with 7.75 per cent of reported fraud cases, well ahead of Uganda (2.98 per cent) and Tanzania (2.78 per cent).
Kenya has recently become more serious about fraud prevention. The conviction of former Tourism permanent secretary and Kenya Tourism Board (KTB) ex-managing director was hailed as a major success.
Both government officials were convicted of conspiracy to defraud the ministry of Sh8.4 million (about $100,000). They received heavy jail sentences and fines for misappropriating public funds.
The data for the Africa Fraud Barometer is compiled by analysing available news articles and reviewing fraud cases from designated databases. Updates are disseminated by press release every six months.