There are three common approaches to measuring fraud and corruption. The first involves assessing the extent to which individuals have personally experienced instances of fraud or corruption. These measures, often referred to as victim surveys, aim to determine the percentage of survey participants who have fallen victim to economic crimes (prevalence).
The PwC Global Economic Crime Survey (PwC GECS) is an example of such a measure, aiming to establish the prevalence of economic crime victimisation. Victim surveys are more effective in capturing instances of fraud rather than corruption. In the case of corruption, victims may be unaware, while perpetrators are unlikely to admit their involvement truthfully.
As a result, corruption is more commonly measured using the second approach, which involves perception surveys. These surveys seek to gauge a population's general perception of corruption.
The TI Corruption Perception Index (CPI) is perhaps the most well-known corruption perception survey. However, perception surveys also face certain challenges. Respondents, typically the general public, are more likely to be aware of and experience petty corruption.
Consequently, their perception of corruption primarily reflects petty instances, although the results are often taken as a proxy for the prevalence of grand corruption. Countries like Kenya, where petty corruption is widespread and extensively reported in the media, are likely to report higher perceived prevalence.
On the other hand, ordinary citizens in regions such as Europe, where the Police Service is consistently rated as the least corrupt institution, may not experience corruption on a day-to-day basis, yet grand corruption may exist unbeknownst to them.
Surveys such as the EACC National Ethics and Corruption Survey aim to measure both the experience and perception of corruption. While this approach may seem more comprehensive, it still possesses limitations inherent in both types of measurement. Furthermore, experience and perception surveys often focus solely on measuring the extent or frequency of economic crimes and rarely delve into the associated costs or impacts.
This leads us to the third and least common method of measurement: Value measurements. Value measurements involve quantitative surveys that seek to determine the financial losses incurred due to fraud or corruption. In the case of fraud, this is typically done on a case-by-case basis during investigations aimed at quantifying the total value lost in specific fraudulent activities. Surveys such as the PwC GECS then aim to consolidate this data by asking participants about the monetary losses suffered in their most significant fraud cases.
However, when it comes to corruption, value measurements are extremely rare. Although numerous estimates and figures are often cited, finding a large-scale, verifiable survey that accurately quantifies the annual cost of corruption is exceedingly challenging.
Given the consensus among existing surveys - such as the TI CPI, EACC National Corruption and Ethics Survey, and PwC GECS - that economic crimes are rampant, it is high time for a comprehensive value measurement survey of the cost of fraud and corruption to be commissioned. The results of such a survey are likely to jolt us into action and facilitate more effective anti-fraud and anti-corruption initiatives.