Kenyan firms not ready to tackle fraud: Report

Despite high levels of fraud in Kenya, most organisations are not prepared to combat the vice, a new survey has found.

Audit firm PricewaterhouseCoopers (PwC) interviewed 99 Kenyan firms and found just 2 per cent of organisations undertook fraud risk management as a way of detecting deception.

Instead, most organisations (26 per cent) in the country detect economic crime through “suspicious transaction reporting”.

In other words, rather than implementing continuous assessments of their preparedness in dealing with fraud, Kenyan organisations prefer to “believe that individuals within an organisation have an understanding of economic crime, and what could potentially constitute economic crime.”

Yet, there is no doubt that economic crime, which includes embezzlement, bribery and corruption, accounting fraud, procurement fraud and cyber crime, have been on an upward trajectory.

Dubious distinction

In fact, the survey ranked Kenya the third most corrupt nation in the world (after South Africa and France), and the global leader in economic crimes.

Further, 61 per cent of respondents said they suffered some form of economic crime in the last 24 months.

Retail chain Uchumi Supermarkets and sugar miller Mumias Sugar are still reeling from the after-shocks of embezzlement. Former directors and managers have been adversely mentioned in relation to the two firms’ questionable accounts.

Other institutions, such as Imperial Bank and Dubai Bank, have seen their future get murky after internal fraudsters raided their coffers, leaving millions of depositors, as well as shareholders, in misery.

Yet organisations appear to be learning slowly from these cases. A total of 33 per cent of respondents reported that in the last 24 months, no fraud risk assessment was conducted.

“As fraud risk assessments are considered to be effective and efficient ways of detecting and preventing economic crime, it is essential for organisations in Kenya to focus on introducing such assessments to help better protect themselves from economic crime,” the report, Global Economic Crime Survey, reads in part.

To underline the importance of these systems, PwC reported that 70 per cent of the economic crimes detected by Kenyan organisations were perpetrated by insiders.

Even worse were Kenyan firms’ efforts at battling cyber crime. Although a third of the respondents said they had been affected by cyber crime in the last 24 months, a small percentage had put in place effective mechanisms to respond to such attacks.

Further, most organisations said they do not believe law enforcement agencies have what it takes to investigate cyber crimes, hacking incidents and malware-related fraud, with 73 per cent of respondents indicating a lack of confidence.

Generally, 72 per cent of respondents said they did not have confidence in law enforcement agencies’ capabilities to combat all forms of economic crimes.

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