Survey reveals huge surge in number and value of frauds

The latest in a series of six-monthly reports from KPMG has revealed a huge jump in the occurrence and financial value of frauds.

Its “Fraud Barometer” showed that over the six month period to March this year, 116 frauds were committed, with a value of $381.1 million (that is, an average of $3.3 million per case). The previous six months revealed 91 frauds, worth $128.4 million (or $1.4 million each on average).

The KPMG survey concluded that the most common perpetrators are business “insiders”, with frauds attributable to management averaging $5.7 million, which is more than double that of non-management employees.

KPMG found that most frauds relate to misappropriation of assets, embezzlement and abuse of position. It also found that both locally and globally, whistle-blowers are becoming an increasingly important in detecting fraud, particularly where the fraud involves collusion.

Other key findings included:

  • Over a quarter of the fraudsters were aged below 36 years, which is almost double the proportion identified globally.
  • Gender diversity among fraudsters is changing – the proportion of frauds committed by women in Australia have increased by 26%. Male fraudsters are responsible for 61% of the offences, with women now committing 39% of what KPMG labels “nefarious activity”.
  • Internationally, the proportion of frauds committed by women identified globally was just 17%. Interestingly, male fraudsters were found to collude more than their female counterparts, both locally and globally.
  • Investors and government agencies are more susceptible to being fleeced by fraudsters than any other category of victims. Government and investors together were the victims of more than $301 million of these frauds.
  • The value of frauds against government agencies has increased by almost four times, and over six times for investors.
  • Queensland and NSW top the fraud charts at $195 million and $124 million, respectively. A number of the significant investor frauds occurred in Queensland.
  • Maintaining extravagant lifestyles and gambling were key drivers of frauds, regardless of gender.
  • About 26% of frauds used technology to enable the fraud in the latest survey results, including spoofed emails and online identity theft. This compares with 24% of fraudsters using technology on a global level.

KPMG says some of the larger and more interesting Australian frauds include:

  • A $68 million tax evasion scam by an emerging technologies business in Queensland.
  • A $65 million fraudulent investment scheme involving more than 11,000 investors in Queensland.
  • A $60 million embezzlement scheme involving a financial adviser in NSW.
  • A $33 million tax evasion scam by a stockbroker turned property developer in NSW.
  • A $23 million sports betting scam in Queensland.

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