06/08/2009 - 00:00

Tough times, more fraud

06/08/2009 - 00:00

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THERE have been 19 cases of corporate fraud costing almost $17 million in Western Australia since the start of 2008, with commercial business the most common victim and management the most successful perpetrator.

Tough times, more fraud

THERE have been 19 cases of corporate fraud costing almost $17 million in Western Australia since the start of 2008, with commercial business the most common victim and management the most successful perpetrator.

In what is said to be the first of its kind in Australia, accounting firm KPMG has released the results of its 'fraud barometer', after tracking the level of major frauds over $100,000 before the courts in Australia for the past year.

The research found just 8.3 per cent of Australia's corporate frauds occurred in WA, with the vast majority of corporate malfeasance occurring on the eastern seaboard (83 per cent of cases and 91 per cent in value), particularly in Queensland, New South Wales and Victoria.

KPMG's fraud barometer found seven cases of embezzlement in WA in the six months to June 2008 worth more than $4.3 million, a further six to December 2008 worth $8.5 million, and six more in the first six months of 2009, worth almost $4.1 million.

KPMG's head of forensic, Gary Gill, said Queensland, which is currently facing the prospect of a royal commission into alleged corruption between big business and the government, experienced the highest number of large fraud incidents with 74.

But those cases only accounted for $81 million of the $321.5 million scammed in Australia during the past year, while 61 cases in New South Wales totalled $142 million, and 57 cases in Victoria had a combined worth of $70.5 million.

"Many businesses are taking a closer look at themselves now, which is resulting in the uncovering of long-running frauds that otherwise may have only been detected by chance," Mr Gill said in a statement.

KPMG found that frauds in commercial business were typically perpetrated by staff manipulating accounting systems or deceiving their employer to divert funds to their own bank accounts.

In the past year, financial institutions were targeted by crime syndicates with ATM skimming scams, while government bodies were found to be regular victims of fraud by both internal staff and external taxpayer fraud.

Investors lost more than $20 million over 18 months through investment scams.

PPB partner Jeff Herbert said while Australia was suffering the effects of the global economic downturn, combing through company books often revealed the prevalence of fraud as a small number of business owners resorted to increasingly desperate and illegal methods to survive.

"Generally, when economic times are tough, more people go broke, and when more people go broke there are more cases of this sort," Mr Herbert told WA Business News.

"But by far the biggest issue [in Perth] is businesses trading while insolvent."

BDO Kendalls associate director of forensic services, and former white-collar crime lawyer, Raquel Greive, said insolvency matters usually went hand-in-hand with company fraud.

"It's not one or the other," she said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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