Business fraud and bribery in Kenya’s private sector has been on the rise in the last two years, a survey by audit firm Ernst and Young shows.
Out of 59 countries surveyed, Kenya ranks fourth globally and third in Africa among nations that face the risk of falling to business fraud. The financial sector is the hardest hit by the vice, the report notes.
In a similar survey in 2012, Kenya had 76 per cent prevalence of bribery in business; this has increased to 86 per cent.
Ernst and Young’s partner assurance head Herbert Wasike said Kenya shows a growing trend in fraud despite companies putting strong anti-bribery policies.
“Encouragingly, there is an increase in fraud detection in Kenya as we employ increased forensic data analytics tools, advanced investigative techniques and better controls,’’ Mr Wasike said.
Cybercrime tops the list of business frauds contributing 62 per cent of risk to Kenya’s business. This has seen many enterprises turn to modern technology such as mobile money payments and web-based transactions.
Other unethical behaviour that Kenya’s business tops in are; offering entertainment to sustain trade, giving gifts to potential business partners and cash payments to win deals.
Of the 52 Kenyan firms surveyed, 27 per cent had significant fraud cases in the last two years. This is more than twice the global average of 12 per cent.
Kenya emerged strongest among those surveyed in financial reporting and accounting of fraud. Only four per cent of Kenyan managers in the private sector showed support to the idea of misstating their company’s financial performance in order to survive an economic downturn, a ratio two points below the global average of six per cent.
“This is quite a rare attribute in emerging markets where higher proportions of respondents stated they could justify such actions. Kenya has a relatively strong culture of ethical and accurate financial reporting,’’ said Mr Peter Kahi who heads forensic-cum-fraud investigations arm at Ernst and Young Eastern Africa.
The survey interviewed over 2,700 executives.