The myth of the lonely, disaffected employee as the main perpetrator of corporate fraud was destroyed last week by a report from accountants KPMG that argues senior management are more to blame.
A profile of the average fraudster shows he is male and middle aged who has worked for at least six years for his employer, according to an international survey of fraud cases.
If he is not the boss himself, and many fraudsters are the chief executive or managing director, he works in the finance department or sales and operations. When he commits a fraud it is usually the start of something bigger.
The study shows over half of company fraudsters commit 20 or more frauds before they are caught.
KPMG said weak internal controls help them get away with it and they were usually only caught when another employee blew the whistle.
“The typical fraudster is aged between 36 and 55,” the firm said in its report.
“By the time he starts enriching himself by illegal means, he has usually been employed by the company for six or more years. He typically works in the finance department and commits the fraud single-handed. In 86 per cent of cases he is at management level — and in two-thirds of cases he is a member of senior management.
“Greed and opportunity are his motivating factors. With the total financial loss caused per fraudster being more than BD500,000 in 42 per cent of cases, the financial toll on companies can lead to the fraudsters’ employers getting into financial difficulties and even going bust.”
Commenting on the report, Paul Carratu, head of investigations firm Carratu and president of the Association of Certified Fraud Examiners, said: “It is the long-serving senior manager who you thought you could trust with your life that is most likely to be a problem.”
KPMG examined 360 company fraud cases across the Middle East, Europe and Africa.
Phillip Inman
