Financial Daily from THE HINDU group of publications
Tuesday, Dec 06, 2005
Financial Daily from THE HINDU group of publications Tuesday, Dec 06, 2005 |
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Corporate Corporate - Economic Offences Corporate India plagued by fraud: PwC survey Our Bureau
New Delhi , Dec 5 ECONOMIC crime is on the rise in the country, with Indian companies now reporting newer types of crimes such as money laundering and financial misappropriation, according to the PricewaterhouseCoopers (PwC) Economic Crime Survey 2005. The findings suggest that more than half the organisations surveyed in the country have faced at least one form of fraud during the last couple of years, with the number of companies reporting fraudulent incidents increasing from 24 per cent in the 2003 Survey to 54 per cent now. The survey also suggests that while the most prevalent economic crime experienced in the country was counterfeiting, corruption, and bribery (in that order), newer crimes are on the rise. In particular, there has been a seven-fold increase in the number of companies reporting financial misrepresentation, while eight per cent of the Indian respondents reported cases of money laundering in the current survey, as against no such cases in the previous survey, PwC said in a release. The biennial global survey, involving 3,634 companies from 34 countries, was conducted in association with Germany's Martin-Luther University, Halle-Wittenberg. Companies in India, on an average, reported suffering five fraud incidents since 2003 and no industry, regardless of size or it being regulated or unregulated, was immune from fraud, the findings suggested. According to the survey, the typical perpetrator of economic crime in India is a graduate or post-graduate male aged 31-50. Also, insiders were involved in one-third of the frauds in the country, with 37 per cent of the respondents reporting that the internal perpetrator was a member of the senior management; in 32 per cent of the cases, the culprit was from the middle management. While there has been a rise in the reported fraud worldwide, the Survey suggests that the unusual rise in the number of reported incidences in India may be attributed to greater awareness and introduction of new legislations on fraud prevention and detection, which has resulted in organisations reporting more incidents of fraud to demonstrate transparency and better governance. The Survey also suggests a higher degree of vigil among Indian companies. About 99 per cent of the respondents had instituted one or more measures, including internal or external audits, internal controls, compliance programmes and code of ethics to counter economic crime. While almost all respondents have one or more measures of detection and prevention of economic crime, the most common means of detecting fraud, interestingly, was by accident or chance (about 37 per cent), the Survey said. Also, in 42 per cent of the cases in India, it was possible to make recoveries from the perpetrator, as against 33 per cent of the cases in Asia-Pacific and just 28 cases globally, the Survey said.
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