Forensics & fraud blog

An interesting article in TheLocal.de on a study by Prof. Friedrich Schneider of Johannes Kepler University in Linz, Austria.
The study estimates the loss to the German economy due to corruption to be € 250 billion in 2012, up from a previous estimate of € 220 billion in 2005, when corruption in Germany was at a historic low-point.
That is a whopping €250 billion that could have been invested in genuine economic activity and grown the German economy, but was wasted by corruption and bribery. Given the importance of the German economy for the Euro-zone, this figure should be a concern of all European countries.

Also considering that Germany is ranked 14th on the TI list of least corrupt countries, so the relative problem of corruption loss as percentage of GDP may be even worse in other countries.

Something to think about when considering the stagnant or even declining economic growth in Europe.

Or maybe not, considering the impact the current crisis has on Greek society.

In his post, Luke Balleny explains the impact corruption has had on Greek society and now on the crisis facing Greece.

The 2012 Greek chapter of the Transparency International report on National Integrity System Assessment suggests that the Greek government “acceptance” of corrupt practices has contributed to the current crisis in Greece.

TI’s Assessment of National System Integrity on Greece can be found here: TI – NIS

Considering the impact on the lives of many if not most Greeks, and the contribution to the current crisis of the corruption in Greece, we must conclude that corruption is in fact not a victim-less crime.  The consequences may not be immediate or clear to most, but as this case teaches us, there almost always are consequences to be paid.

Fighting corruption, both by preventative measures and controls and by investigating and exposing corruption post-fact, is crucial to the smooth operation of the economy as a whole. And if you need more convincing of the real-world impact, just look at Greece today and the draconian budget measures that they have to implement.

With the 2012 World Economic Forum in Davos just behind us, Transparency International reflect on some of the evolutions in the global corporate community in terms of transparency, corruption, bribery and perception of people around the world.

TI sees the need for companies to consider new approaches and new business models in light of the persistent global economic woes and ever growing public dis-trust in corporations around the world.

Well worth the read: TI – Corporate Transparency: Old Problems and New Ideas

Interesting publication from the UK Serious Fraud Office providing comments on the impact of anti-fraud and anti-corruption legislation. It provides insights into current international legislation and related implications. Additionally it provides hands-on information regarding the management of forensic investigations and the implementation of preventive measures.

Serious Economic Crime: A boardroom guide to prevention and compliance

Belgian businesses are increasingly falling victim to cyber-crime. The trend is revealed by PwC’s ‘Global Economic Crime Survey 2011’. This bi-annual study, now in its sixth edition, in which 3,877 organisations have taken part worldwide, investigates fraud occurring within businesses and other organisations as committed both by staff and by customers and suppliers.

In Belgium, 84 undertakings, including 36 listed companies, participated in the survey. Of the Belgian organisations faced with economic fraud in the past year, no fewer than 44% (23% globally) said that they’d fallen victim to cyber-crime. Misappropriation of assets continues to be the most common form of economic crime here just like elsewhere in the world.

A further striking conclusion from the survey is the great divide between perception and reality: businesses under-estimate their vulnerability and fall victim to economic fraud more often than they imagine. It continues therefore to pose a stubborn problem, and not a single sector is spared. Which is why businesses have to protect themselves better, given that the economic damage being done is enormous. For 1 in 10 companies (worldwide) that were faced with cases of economic fraud in the last 12 months, the losses topped five million dollars.

Please click the following links to see the different reports:

• Global report: http://www.pwc.com/crimesurvey
• Local reports: http://www.pwc.com/gx/en/economic-crime-survey/country-supplements.jhtml

Not a week or a day passed by without a reference to fraud in the media. No matter the country, the size or the sector of the organisation, fraud unfortunately does not only happen to others.

The Forensic Auditor in the fight against economic crime, a full-time job!

A little-known job and often misunderstood by the public is the one of “Forensic Auditor”. Although this profession is much more developed in the Anglo-Saxon countries, it also exists in Belgium and requires combining legal, IT, financial and economic expertise.

There is no standardised approach; each project must be tailored to the needs of the organization and to its industry. When fraud is uncovered, the first concerns have a legal, social and financial character. The Forensic Auditor assists companies in managing their fraud risks (through prevention, detection or investigation).

“Zero risk” does not exist but it is key to prevent and detect potential fraud. The key behaviour is to anticipate and act proactively to fraud risks.