Kiwi businesses report less fraud, but procurement cons affect 1 in 5, PwC says
By Suze Metherell
Feb. 20 (BusinessDesk) – One in three New Zealand businesses have been victims of fraudsters, according to a global
survey, down from 49.5 percent in 2011, although procurement related fraud is on the rise, reflecting the rebuild of
Christchurch and more companies doing business offshore.
PwC’s 2014 Global Economic Crime Survey asked more than 5,000 respondents in 95 countries, including 82 kiwis, about
their experience with fraud. Of New Zealand businesses surveyed 33 percent said they had been the victim of fraud.
The decline in fraud compared with the 2011 survey partly reflects increased corporate vigilance in the wake of the
global financial crisis and high-profile prosecutions including pyramid scheme fraudster Bernard Madoff in New York and
Wellington financier David Ross.
“You can infer the lower levels of fraud are because there are more corporate controls since the GFC when they were
stripped right back,” Eric Lucas, PwC forensic services partner told BusinessDesk. “There are quite reasonable levels of
identifying fraud.”
He said despite the apparent decline kiwis must “maintain a watchful eye” as increased technology use gave more
opportunities for would-be con artists. There had been an increase in tip off procedures, with 71 percent of surveyed
companies reporting they had a whistleblowing mechanism within their company.
Procurement fraud had affected 19 percent of local businesses surveyed and ranged from playing favourites with tenders,
taking kickbacks from suppliers or contractors and readjusting orders.
“It goes right through the supply chain,” Lucas said. “We included procurement fraud for two reasons, partly because of
the Canterbury rebuild, and partly because a lot of organisations outsource parts of their business these days.”
“We are seeing more cases on the procurement side of businesses with fraudulent activity,” he said.
The other ‘big five frauds’ identified in the survey included 70 percent who had been victims of theft, 15 percent who
had experienced bribery and corruption, 15 percent human resources fraud and 11 percent affected by cybercrime.
New Zealand has had a string of high-profile fraud cases in recent years. The Serious Fraud Office brought its
investigations of 16 failed finance companies to a close in April last year, and is scheduled to complete the two
remaining prosecutions this April. At November last year SFO said it had convicted and imprisoned 14 persons in relation
to finance companies, and four people had been sentenced to home imprisonment.
The person most likely to commit fraud is a 31 to 40-year-old man who has been with the company for less than five years
and is educated to a high school level or less. Of the organisations surveyed, 70 percent said fraud was committed by an
employee of the company.
(BusinessDesk)