A damning verdict pronouncing Nigeria as the most fraudulent country in Africa was passed by renowned audit firm, KPMG, barely three days after President Goodluck Ebele Jonathan said his administration ranks first in terms of combating corruption in the country.
According to the result of KPMG’s Second Africa Fraud Barometer findings, which was launched in April 2012, Nigeria‚ Kenya‚ Zimbabwe and South Africa accounted for 74 per cent of all fraud cases reported on the continent.
But out of the 74 per cent, Nigeria accounted for the greater percentage.
South Africa’s case was not as bad as Nigeria’s.
Though the number of fraud cases in Africa fell to 503, a marginal decline, in the second half of 2012, when compared with 520 in the same period in 2011, Nigeria did not come out better than it was before.
The value of corruption cases equally fell from $3.3 billion to $2 billion.
The report, quoting Olumide Olayinka, Head of Risk Consulting of KPMG Nigeria, said: “Nigeria, for instance, experiences high levels of fraud and corruption, a legacy stemming from the military era which lasted until the elections in 1999. The oil sectors also exacerbate fraud and corruption. Most types of fraud in the country are bribes in the private and public sector, misappropriation, and contract inflation. Holders of public office and senior management in the private sector commit most fraud, victimizing, company shareholders and the general population. Nigeria’s media reports consistently on various fraud cases. Often cases are taken up by the legal system of the country.
“There have been a lot of cases involving the banking and the Oil & Gas sectors or government that lead to prosecution. The current noticeable trend is that many cases either end with a plea bargain or are simply closed without any conviction.
“The general belief in Nigeria is that the legal system is not effective enough.”
The report went further: “This is only the second barometer we are publishing, but we have noticed a decline both in terms of reported fraud cases and their monetary value. We see this as a positive trend.”
Petrus Marais, KPMG’s Global Leader of Forensics, who developed the barometer, added: “There is an increasing interest in Africa as an investment destination, but the continent struggles with a rather negative image.
“We are providing an analysis of fraud profiles in individual African countries to foreign investors since a generic approach to assessing fraud risks on the continent is not possible. The overriding point is that investors need to assess the prevailing environment in each country.
“We have identified government as a high risk area both in terms of perpetrator and victim. We therefore added a new perpetrator category of ‘government officials’. It would seem from the statistic that government is under attack from its own people. Elsewhere in the world similar surveys show that companies are under attack from management more than employees.
“We are asking ourselves about the extent of prosecution of fraudulent government officials. This would depend on whether the respective legislation to prosecute fraud is in place and the capacity to implement the law exists. Cultural acceptability of fraud is also an important consideration.
“In the private sector, multinationals are increasingly exploring ways of addressing internal fraudulent activities. Since international and local legislation has been put into place, the consequences for companies are far greater than ever before.
“In the East African region, Kenya in standing out with 7.75% of reported fraud cases, well ahead of Uganda (2.98%) and Tanzania (2.78%). Most fraud in Kenya targets government and financial sectors as elsewhere on the continent.”
In the West African region, oil was recently discovered in Ghana, nurturing a sense that the level of fraud and corruption issues from Nigeria may be replicated there.
“Public opinion is that fraud and corruption in Nigeria is increasing and that may spill over into other countries in the region,” said Olayinka.
The data for the Africa Fraud Barometer is compiled by analysing available news articles and reviewing fraud cases from designated databases.
Updates are disseminated by press release every six months.
Marais said: “It is too early to determine whether the positive trend will be sustained, but over time we are expecting to get a stronger picture of the different types of fraud. This will allow us to provide better advice to potential investors which will economically benefit the continent in the long term.”
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