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Daily Nation : February 26th 2014
34 | BUSINESS STUDY | Tender fraud was also singled out as rising fast Mid-tier managers play big role in economic crimes, says study PwC says the groups have contributed to 36 percentage points rise in prevalence since 2009 BY RAMENYA GIBENDI @ramenyag email@example.com M iddle level managers are the highest perpetrators of economic crimes in organisations, says a new study. The study by Pricewater- houseCoopers (PwC) titled Economic Crimes; A Threat to Business Processes said the prevalence rate at which middle level managers commit fraud has been rising from 20 per cent in 2009 to 56 per cent in 2013. Most of the economic crimes, according to the study, are committed by internal fraudsters with 124 Kenyans surveyed saying internal staff were responsible for 61 per cent of economic crimes in many organisations. Above global average Internal fraud prevalence is thus above the global average of 56 per cent and only 2 per cent shy of the continent’s average of 63 per cent. “Our prevention measures could be targeting the lower level staff thus giving more room to the middle level counterparts to exploit systems,” PwC’s head of forensics Moniu Thoithi said. Senior management ac- counted for 13 per cent of economic crime, while the lower cadre employees ac- REPORT What survey found out Rate: Kenya respondents reported a decrease in the frequency of conducting fraud risk assessment within organisations. Price: The cost of economic crime increases significantly when the profile of the perpetrator is within middle/senior management. Section: Procurement fraud is perpetrated earlier in the purchase cycle, making detection of such crimes difficult. State: Fraud perpetrators getting bolder and targeting larger sums of money. counted for 28 per cent of fraud committed in the country in 2012 and 2013. PwC now warns that the involvement of middle level managers in fraud is likely to increase the cost of economic crimes in the country as they have more discretion over large sums of money. “Surprisingly, there is reduced rate of fraud risk assessment within organisations, which is a very alarming trend,” Mr Thoiti said. Theft of assets by directors or staff for their own benefit tops the list of the five major forms of economic crimes in Kenya with accounting fraud being the second most common form of fraud reported. Others are bribery and cor- ruption, procurement fraud and cybercrime that is following increased technological transformations—including digitisation of personal data and processes. SALATON NJAU | NATION PricewaterhouseCoopers Limited forensics leader Muniu Thoithi (left) and the advisory leader, Government and Public Sector director Alphan Njeru during the release of the Global Crime Economic Survey 2014 Kenya report at PwC Tower in Nairobi yesterday. The study shows economic crime declining in Kenya, but incidents still high compared to the global average. DAILY NATION Wednesday February 26, 2014 WORLD MOBILE CONGRESS Companies now fight for a part of your body with a number of smart gadgets. Page 36 Group puts Kenya ahead in mobile cash deals BY NATION CORRESPONDENT Kenya is a global leader in mo- bile phone-based cash business, holding a third of the world’s 61 million virtual money accounts. An association of mobile operators (GSMA) meeting in Spain yesterday released a statement saying the number of the unbanked poor had benefited immensely from continued growth in mobile phone-based financial services pioneered by Kenya’s Safaricom. The GSMA’s Mobile Money for the Unbanked programme, in its third annual mobile financial services state of the industry report, said the number of active mobile money users continues to grow rapidly year-on-year, with more than 61 million accounts active as of June 2013, compared to 37 million in June 2012. Nearly tripled “Further, the number of reg- istered mobile money accounts nearly tripled from 71 million in June 2011 to 203 million in June 2013. Services have expanded across a greater number of regions, with 219 in 84 countries at the end of 2013, compared to 179 in 75 countries at the end of 2012,” it said. Most services remain in sub-Sa- haran Africa with 52 per cent of all live mobile money deployments. The report noted that a rising number of firms are overcoming operational hitches to create solid distribution networks and a large base of active clients with 13 of the leading mobile operators serving over a million customers each. Services have expanded across a greater number of regions” Report on performance Kenya eyes Kisumu and Coast for nuclear plant BY NATION CORRESPONDENT Kenya is studying the possibilities of set- ting up a nuclear power plant in Kisumu or Mombasa due to their proximity to Lake Victoria and the Indian Ocean respectively. Cabinet Secretary for Energy and Petroleum Davis Chirchir said that the government will engage the two counties on the project. He noted, however, that they were yet to come up with the budget for the plant. “We will be seeking private-public partnership in funding the project which, he said, should be ready by 2025 with 10,000MW,” Mr Chirchir said. The government, the minister said, is com- mitted to ensuring that the energy sector and the nuclear energy initiative pump up electricity generation to support growth. Six months ago, Mr Chirchir said, the government launched the 5,000MW elec- trification programme to be delivered in 40 months. “This programme will increase our electricity output from the current 1,700MW to almost 7,000 by the end of 2016. “This noble initiative is based on geother- mal, natural gas, coal, solar and wind as the sources of energy,” he added. The Cabinet Secretary, however, said that the more than 5000MW initiative is just a one leap in the greater journey for the country’s energy sector. DIANA NGILA | NATION Participants during the nuclear summit yesterday.
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