INTOUCH : Economic Crime Prevalent

Only 70 percent of economic crimes suffered by New Zealand businesses are reported to an organisation’s board, audit committee, or executive management, according to PricewaterhouseCoopers’ analysis.
Surprising when, according to the firm’s 2007 Global Economic Crime Survey, economic crime is fact of life for business in New Zealand – more so than in some other areas.
The number of organisations which experienced an economic crime incident (67 percent of respondents) is significantly higher in New Zealand than in the Asia-Pacific region and globally.
Among local firms affected, the total loss was more than $69.5 million, with an average loss of $1 million.
The survey interviewed 5428 organisations globally (including 78 in New Zealand).
“The results show no organisation is immune to economic crime – regardless of size, organisational structure or industry,” said John Fisk, partner in the investigations and forensic services practice at PricewaterhouseCoopers.
According to the 2007 survey results, asset misappropriation remains the most likely economic crime locally, with 59 percent of victim companies suffering the theft of assets such as money or equipment.
The threat of intellectual property infringement is also present with 18 percent of respondents identifying this as the most likely threat to their businesses, and 16 percent reporting already being victim of this crime.
In New Zealand, 66 percent of economic crime involves person inside the business or organisation. ‘typical’ perpetrator in New Zealand is male (70 percent), has been in his position and with the organisation for less than two years, is below middle management level, has high school education or less and is aged between 31 and 40.
John Fisk said his experience in New Zealand is that while this profile applies to many perpetrators, it is not applicable in every case, with larger frauds much more likely to be committed by perpetrators in more senior roles and likely to cause damage in addition to pure financial loss.
The survey shows internal controls alone are not enough to fight economic crime and that an ethical corporate culture plays an equally important role in deterring fraud. This is backed up by results showing that 50 percent of economic crime incidents in New Zealand were detected through some form of tip-off, or accidentally uncovered.