…as strategies post success
By More Matshediso
Free State MEC for Finance Seeiso Mohai
BLOEMFONTEIN – Better financial husbandry strengthened by the introduction of a strategy to deal with corruption in a holistic way has resulted in a 20 percent drop in fraudulent activities in the Free State.
The MEC of Finance Seiso Mohai on Tuesday, November 6 revealed that stronger rules and procedures to stop nepotism, favouritism, and the awarding of contracts to undeserving people had reduced fraudulent activities in the province during the 2011/12 financial year when compared to the previous financial year.
Mohai attributed the contraction in incidents of fraud to the adoption of an anti-corruption strategy comprised of financial audits, use of investigating units such as Special Investigation Unit (SUI) to root out corruption in the public sector.
The strategy also includes laws and processes of protecting “whistle blowers”, training of all public servants on codes of conduct, ethics and corruption, and prosecution of all offenders and blacklisting of those who have been found guilty.
“With preventative mechanism in departments and improved monitoring systems tied to detective controls, we are confident that the decrease in percentage will yield positive results continuously,” Mohai said.
“We should continue building an environment which is free of fraudulent activities,” he added.
Mohai said the Free State government joined the world in celebrating International Fraud Awareness Week because it does not operate in a fraud free environment.
He said it is government’s responsibility to account for its own working atmosphere in creating a free fraud environment to enhance service delivery within set timeframes. “No government department, public entity, or Municipality is exempted from fraud. Steps should be taken to deter the occurrence of fraud and mitigate loss,” he said.
Meanwhile, Central Region Chairperson of the Association of Certified Fraud Examiners (ACFE) Rudolph Laubscher announced a 30 percent spike in fraud from the 2009 survey. “Unfortunately and as confirmed by our 2011 Global Economic Crime Survey that focused on cybercrime, fraud rose by 30 per cent from the 2009- survey,” he noted.
“Fraud is by its very nature a hidden crime. To complicate its detection even further, it often overlaps with other crimes like theft and corruption.” Laubscher said it was implicitly evident that blowing the whistle on such a serious crime might have consequences for employees as they often implicate their superiors. “One aspect that deserves attention in the South African context is the need to depoliticise fraud.”
According to the ACFE report, about 77 per cent of fraud was committed by individuals working in one of six departments including accounting, operations, sales, executives, customer services and purchasing.
The report revealed that a typical organization loses five per cent of its revenues to fraud each year, translating into a potential projected annual fraud loss of more than R3.5 trillion.
“In South Africa, we are proud to announce that this is the third year in supporting the initiative that started out as a simple thank you to the fraud fighters in blue,” said Laubscher.
International fraud awareness week was launched in the United State and since 2006 when the ACFE joined the effort.
It has become one of the biggest events on the anti-fraud calendar. International participant organisations have grown from 100 to over 600. Laubscher said fraud investigators should not be used to eliminate business or political opponents.
“Fraud touches on the moral fibre of our society and asks whether we are truthful or not,” he added.
The week-long campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education.