To Catch a Thief: Nipping Fraud in the Bud: Senior Managers Must Play Their Part in Fighting White-Collar Crime If Local Organisations Are to Stem the Rising Tide of Fraudulent Behaviour
Cases of workplace fraud are on the rise in New Zealand, and detecting it requires a strong anti-fraud ethos, good systems, skill and sometimes a little bit of luck, according to white-collar crime specialists.
About 50 New Zealand white-collar crime and fraud experts, together with specialists from Australia, met in Auckland recently to share their knowledge at the Inaugural New Zealand Fraud Summit.
It drew together police, legal experts, corporate security executives, bankers, senior bureaucrats, forensic accountants and computer experts.
PPB McCallum Petterson director, and summit presenter, Barry Jordan said the clear message was that successful antifraud measures required strong leadership support within an organisation.
"Fraud boils down to people presented with the motive and opportunity to steal," said Jordan, who heads up PPB McCallum Petterson's forensic services division.
A number of New Zealand corporations and government agencies now have specialist internal anti-fraud teams in place with the technical skill to prevent and detect white-collar crime, but success rates demonstrated that systematic prevention measures and decisive remedial action still also required "buy-in" from senior management.
Jordan said that, based on the latest American studies, the Association of Certified Fraud Examiners estimated the cost of fraud was five percent of company revenues. This was 20 percent down on previous estimates, probably largely due to stronger regulatory measures put in place since the spectacular collapse of US energy firm, Enron.
New Zealand, however, was in a different economic cycle with a different regulatory environment, and the current experience here was that fraud caseloads were rising.
"As the economy slows down, managers tend to focus more on cost control and analysis, which can trigger investigations when discrepancies are found," he said.
"Typically, frauds detected now started 18 months ago when a stronger economy provided greater opportunities, and when management was focused on revenue not cost.
"In New Zealand we deal with cases involving amounts ranging from $50,000 to $500,000, and if you don't act quickly the chances of recovering more than a quarter of it are very low."
International studies showed small to medium-size business often bore the brunt of white-collar crime largely because they didn't have the skills or resources to put prevention measures in place.
But while these same international studies showed perpetrators were more likely to be university-educated white males aged 3040, this was not the case in New Zealand.
"Our experience is that more women are involved ... often senior accounts clerks aged 25-35 ... probably highly intelligent, maybe frustrated at a lack of career progress, and greedy for material wealth. …