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Commercial crime: prevention rather than cure

Commercial crime has taken on massive proportions in South Africa, to the point where the criminal justice system is unable to cope.

Rather than wait for solutions from this quarter, companies should rather be looking to resolve the issue by proactive staffing policies and internal security procedures, which include outside security management, says Howard Griffiths, chairman of GriffithsReid.

"Research indicates that as little of 20% of all commercial crimes are actually reported," says Griffiths, a director of this country's oldest security management company. "If this figure is accurate, it means that there are in excess of 350 000 commercial crimes committed in South Africa every year, and increasing all the while."

Even more disturbing is the fact that the justice system is already overloaded with the reported crimes, with even the simplest cases now taking more than a year to come to court. "Very often this represents no solution at all, as the damage is long done and irreparable by the time a prosecution is obtained, as only then can damages be awarded," Griffiths says.

Private security solutions

As a result, companies will be increasingly forced to start using private security solutions, to combat commercial crime and indeed this is already the case in many large instances.

Traditionally, commercial crime consists of five major categories: fraud, corruption, forgery and uttering, theft, and organised crime or syndicates.

Fraud is misrepresentation - by deliberate omission or positive failure with the intention to defraud. "Legal intent to defraud can be defined as making false representations when the consequences of such representations could be foreseen," Griffiths says.

This includes recklessness - managing or trading with a company without regard to the interests of the shareholders. This could include public statements: one made in the belief that it is true, is not misrepresentation: one made in the hope that it is true, is classed as reckless.

Private security solutions employed to combat this particular form of crime include forensic analysis of policies and procedures, monitoring of individuals and extensive background checks, which include personality analyses, says Griffiths. "If certain traits - such as a tendency towards exaggeration, for example, can be identified before a person is entrusted with any particular position within a company, the chances of fraud - conventional or reckless - can be reduced."

Theft is defined as the unlawful dispossession of the property of another, while corruption in the South African sense is fast becoming an institutionalised method of obtaining favours in return for services or goods.

"Once again, a simple criminal record check on employees before they are employed will reveal a host of details that person would rather keep hidden," says Griffiths. "Prior convictions for theft or related crimes can most certainly be used to screen employees and reduce the chances of re-occurrence."

Corruption is another matter. "A valuable part, but not the only one, in which a private security solution can deliver in this field is the identification of hidden assets by a suspect. It is becoming easier and easier to hide ill-gotten gains," says Griffiths. "Very often, only a highly specialised investigation will reveal stashed goods or cash, and the level of sophistication required to unearth such caches is usually beyond the reach of the non-security specialist company."

Forgery and uttering relate to documentation - and once again, the increasing sophistication of fraudsters in this regard requires specialist intervention. "Only a short while ago a case was revealed where fraudsters, using chemicals, had lifted a signature off a credit card and placed it on a cheque, so perfectly and without damaging the original card, that the cheque was accepted as genuine by a bank." Private security companies are very often the only ones with enough technical skill and know-how to detect such instances, and take measures to prevent them.

Organised crime takes on the form of drug rings, extortion rackets and the like - but also includes an important and growing phenomenon in this country: that of employee crime. "For example, a bank recently suffered from an organised syndicate which involved outside criminals and bank tellers, who would either pass through cheques otherwise deemed unacceptable, or simply overpay or underpay clients," says Griffiths.

Proactive answer

Employee screening - both pre- and post - provides much of the proactive answer to this problem. "While pre-employment screening will shake down those with existing criminal records, post-employment screening will reveal those who have developed criminal tendencies while in the employ of an organisation."

Post employment screening will also involve monitoring employees for any relevant lifestyle changes - for example, substance abuse, increase or decrease in living standards and so on, all of which can be firm indicators of a problem.

"Most commercial crime has its origin in opportunity combined with motivation and justification," says Griffiths.

"If an employee is presented with an opportunity, then only the strongest amongst any of us will not fall prey to that opportunity, even if it includes taking a pencil," he says.

"Motivation plays another role: is the person in need of money? Or are they acting out of spite towards the company? Only post employment screening will answer those questions."

Griffiths says that companies must have a defined policy of commercial crime, and must be willing to enforce it, otherwise such policies are meaningless.

"With criminal prosecutions fast disappearing as a viable option to prevent commercial crime, privately driven solutions are becoming the first line of defence," Griffiths concludes.

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