Corruption and unethical behaviour in South Africa continues to be an ongoing concern – not only for the growth of business but also the South African economy.
This is according to Ina van der Merwe, Director and CEO of South African background screening market leader, Managed Integrity Evaluation (MIE), who indicates that in spite of arrests and ongoing investigations within various organisations, the epidemic remains prevalent.
According to the Council for the Advancement of the South African Constitution, South Africa as a nation loses an estimated 20% of its Gross Domestic Product (GDP) annually to corruption. South Africa also scored a low 44 out of 100 in the latest PricewaterhouseCoopers (PWC) Corruption Perceptions Index. This is in addition to South African organisations being highlighted as suffering significantly more from procurement fraud than other organisations globally according to the organisation’s Global Economic Crime Survey of 2014.
“The often unlawful wastage of money and resources in the public sector jeopardises its relations with credible suppliers who choose not to be involved in corrupt scandals, which may then result in inferior quality of products and services to society.” Recently, the Hawks arrested an Eastern Cape municipality official for money laundering, fraud and theft. Among other allegations, the official had allegedly transferred R2 million to a company owned by a relative.
Also making headlines, the former CEO of a government agency was recently accused of alleged maladministration relating to awarding irregular tenders, cronyism, corruption and mismanagement of finances. Van der Merwe says, “These are just a few examples of incidents which highlight the prevalence of corruption within South Africa’s core organisations, heavily relied upon by their respective communities.”
“We need to ensure ethical practice across all entities. This has never been an easy task as corruption has infiltrated the system to such an extreme level. We have witnessed the rapid increase in qualification fraud over the past five years - increasing by 200% - and can see fraud heading down the same path,” she adds.
With this in mind, MIE launched a software application which filters through employee and vendor / supplier information.
“Suspicious links or potentially corrupt relationships that exist in the organisation, between staff and / or external suppliers, are then flagged for investigation,” van der Merwe explains.
“South African businesses do not have adequate insurance in place for the risks related to fraudulent activity, it is therefore becoming ever more necessary for businesses to implement processes that will prevent the occurrence in the first place,” she concludes.