Board Members Behind a Fifth of Business Fraud; RAPID RISE IN WHITE-COLLAR CRIME IN THE RECESSION

Western Mail (Cardiff, Wales), June 22, 2011 | Go to article overview

Board Members Behind a Fifth of Business Fraud; RAPID RISE IN WHITE-COLLAR CRIME IN THE RECESSION


Byline: SION BARRY

THE level of fraud among company bosses is on the rise.

The research from business advisory firm KPMG found that globally board members at divisional, subsidiary and corporate level, commit nearly one fifth of all white collar fraud - an increase from 11% in 2007.

The research Who is the Typical Fraudster? analyses the pattern of fraud from 348 cases across 69 countries, selected from the thousands of cases which KPMG has investigated for its clients.

Many of these cases have never been made public. The report focuses on white collar crime (including financial misreporting) and paints a picture of the characteristics that make up the average fraudster.

Ginny Stevens, partner at KPMG's Cardiff office, said: "While our research has shown that corporate fraudsters are typically male, 36 to 45-years-old (41%) and often commit fraud against their own employer, what has remained 'unknown' until now, is the extent to which the temptation to commit fraud has infiltrated both the board and executive management across the globe."

The research found that the typical fraudster will work in the finance-function or a finance-related role (32%) often for more than 10 years (33%) and usually in a senior management role or board role (in aggregate 53%).

Ms Stevens said: "In the UK, the survey showed an even higher proportion of fraudsters who had worked for their employer for more than 10 years (57%), with 50% in senior management or board roles."

Often long-serving and more senior employees will be better able to override controls and have accumulated a good deal of personal trust, so will be less suspected. As a result KPMG said they are more prone to committing embezzlement and/or procurement fraud.

Examples include false billings by a supplier to fund kick-backs to a senior employee; employees accepting bribes from a contractor in exchange for signing off inflated project costs; and supplier collusion with victim company employees leading to over-billing. …

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