Theft of information tops all frauds, says global report

By James Anyanzwa

Theft of information and electronic data has surpassed all other frauds, according to a new global fraud report.

The Economist Intelligence Unit survey results show that fraud is predominantly an insider job and most companies are deterred from going global due to fear of fraud.

The survey commissioned by an integrity firm, Kroll, also shows that there is lack of preparation for greater regulatory enforcement in most companies.

An estimated 87 per cent of African-based companies reported being affected by at least one fraud.

The report showed that out of the eight of the eleven frauds covered in the survey — information theft or attack, theft of physical assets, management conflict of interest, financial mismanagement, internal financial fraud, vendor or procurement fraud, corruption and market collusion — the continent had the highest incidence for any region.

Less widespread

"Although a number of frauds were slightly less widespread this year than last, this decline was more than offset by large increases in others, notably management conflict of interest and information theft, where the incidence roughly doubled," said the report.

The annual Global Fraud Survey, commissioned by Kroll and carried out by the Economist Intelligence Unit, polled more than 800 senior executives worldwide from a broad range of industries and functions in July and August last year.

According to the report, African respondents are more likely to consider themselves highly vulnerable and moderately vulnerable to every fraud in the survey, often by a very wide margin.

For example, 22 per cent say that they are highly vulnerable to corruption, compared to a survey average of eight per cent — and corruption was one of the frauds that was slightly less widespread in this year’s survey compared to the last one.

Every anti-fraud strategy in the survey is more widely adopted in Africa than on average except for IP protection, and IP theft is one of the few areas where the incidence of fraud on the continent is below average.

The survey also points to one of the ways in which widespread fraud is frustrating economic investment.

Fraud has dissuaded 11 per cent of companies worldwide from operating in Africa, tying with China for the highest figure in this regard.

China, however, can find other investors easily at the moment. Africa needs them rather more.