The number of reported cases of fraud in business is on the rise, and in some cases incidents of fraud may be so severe that a business may struggle to recover, says Alison Weihe, an award-winning entrepreneur, speaker and Identity Intelligence coach.
Recent statistics from the South African Banking Risk Information Centre reveal a staggering 30% increase in reported cases of business fraud over the past year.
Weihe says what is most worrying is that business fraud often involves employees of the business at times in collusion with outside players. According to the Global Economic Crime and Fraud Survey, 41% of economic crimes in South Africa were committed by employees, 36% of fraud committed by external sources and 21% was a result of collusion between the two.
Globally, a similar trend is emerging, with PwC’s Global Economic Crime and Fraud 2022 Survey reporting that nearly 70% of organisations experiencing fraud reported that the most disruptive incidents came via an external attack or collusion between external and internal sources.
Weihe, whose own business endured a devastating loss because of fraud, says the people who betrayed her were the ones she trusted most with the management of the business’s financial affairs.
Disclosing this publicly for the first time in her book, Belonging, Weihe says while on a family holiday she received information revealing that her bookkeeper had been defrauding her business. She and her husband, Friedel, obtained a five-year audit trail from their bank, spending a weekend meticulously going over transactions, examining numbers and identifying duplicate payments.
“By 2010, the total embezzled amounted to R10-million, equivalent to R25-million in today’s money taking inflation into account,” recalls Weihe. “We were devastated; this fraud brought our business to its knees.”
Ways to reduce risk
She says they had no reason to suspect that their bookkeeper was anything but royal and trustworthy. “Our bookkeeper led a modest lifestyle and lived in a low-income area, and was married to an unassuming husband who distributed Bible tracts for a living.
“Meanwhile, the bookkeeper and her husband pair were spending millions at various casinos,” adds Weihe. To add insult to injury, Weihe discovered that the head of the auditing firm she relied on was not a qualified chartered accountant.
According to Marisit Credit Services, there are several ways to reduce the risk of fraud including:
- Employee background checks to improve the quality and standard of hiring practices by deterring unqualified or dishonest applicants.
- Conducting lifestyle audits to determine if an employee is living above their means, by comparing their known income with their current expenses and lifestyle to reduce fraudulent practices.
- Changing payroll software which will help to remove the opportunity to commit fraud by strengthening accounting policies and investing into fully integrated digital payment platforms, such as ERP systems, to organise payments more efficiently.
- Create a fraud prevention hotline to encourage employees to alert managers of known or suspected fraudulent behaviour.
While Weihe was able to recover from her losses and build a stronger and more resilient business, she says the incident was a wake-up call and to a degree responsible for her journey to reinvent herself, summoning the strength that has made her the person she has become today: confident, resilient and more determined to succeed.
At more than 60 years of age, Weihe has become a global brand, a respected speaker, entrepreneur, author and Identity Intelligence coach, and shows no signs of slowing down.
- This promoted content was paid for by the party concerned