Fraud in New Zealand is on the up

News Release

Fraud in New Zealand is on the up

• 49.5% of New Zealand respondents were the victim of one or more frauds in the past year
• Cybercrime is a significant new threat
• Corruption and bribery levels are low, but increasing.

Nearly half of the 93 New Zealand respondents to the 2011 PwC Global Economic Crime Survey say they have suffered fraud in the past year, with cybercrime emerging as the latest threat to hit businesses

The findings mean New Zealand has jumped up the global economic crime rankings for reported frauds: moving from eighth in 2009 (out of 54 countries) to fourth place in 2011 (out of 78 countries). This places New Zealand in a higher position than Australia (47%), the US (45%) and the global average (34%) for reported levels of fraud among the 3,877 global survey respondents.

Compared to 2009 figures, the survey found almost all sectors experienced a rise in fraud, with the top-three sectors in New Zealand coming from the retail and consumer (80%), energy and mining (71%) and government (60%) sectors.

PwC Forensic Services Partner Eric Lucas says “given the uncertain economic environment, the pressures and incentives to commit fraud have not declined since the 2009 survey, but instead appear to have increased.

“For the first time, cybercrime has been included in the survey and is now New Zealand’s third most reported type of economic crime. The survey shows cybercrime is taking off. Criminals are becoming more sophisticated in their approach as they have identified how organisations have a reliance on technology and the fraudsters are acquiring the technical skills to take advantage of low risk and high rewards,” adds Mr Lucas.

Yet, the survey shows New Zealand businesses are not taking the threat of cybercrime seriously, with 39% of respondents saying they hadn’t had any cyber security training in the past year.

Asset misappropriation was again the most prevalent form of economic crime in New Zealand (74%), showing fraudsters simply want money.

Of the New Zealand respondents who suffered losses, 65% lost less than NZD135,000 (USD100,000), but two respondents lost more than NZ$6.7 million (USD5 million).

“Despite the significant and ongoing threat, some businesses are reluctant to deal with perpetrators in a way that will deter future crimes. Fraud continues to be a persistent fact of business life in New Zealand and significantly impacts both large and small businesses, with organisations facing internal and external risks,” says Mr Lucas.

The survey found of the 39% of detected frauds that came from tip-offs, only 2% of these were reported through formal business channels, such as a whistleblower hotline.

“Businesses need to ask themselves, what happens when the person suspected of committing fraud is also the person responsible for detecting it? And when a fraud was detected, why did just 21 per cent of New Zealand organisations give the fraudster nothing more than a formal wrap over the knuckles?” says Mr Lucas.

Pleasingly, the survey upholds New Zealand’s image as one of the least corrupt places in the world, with just 3% of New Zealand respondents saying they have suffered bribery or corruption in the past year, compared to a global average of 10%.

“Although New Zealand’s bribery and corruption levels are low, this type of crime is clearly increasing and one to watch. A threefold increase since 2009 should act as a warning against complacency.”
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Notes to Editors:
Methodology: The sixth Global Economic Crime Survey was carried out between June 2011 and November 2011. The survey questionnaire had three sections: a section with general profile questions; a section with comparative questions looking at what economic crime organisations had experienced; and a section on this year’s special topic, cybercrime.
3,877 people from 78 countries - including 93 New Zealand respondents - filled in the online survey. Participants were asked to answer the questions with respect to their organisation and the country in which they are mainly based.
A soft copy of the global and New Zealand reports is available upon request.

About the PwC:
PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services.

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