Business Irish

Sunday 21 January 2018

Respected directors 'most likely to defraud their own company'

Adrian Weckler

Adrian Weckler

A major survey into the profile and habits of white-collar fraudsters reveals that respected, extroverted directors who have been employed for several years are most likely to swindle their own company.

The report, entitled 'Global Profiles Of The Fraudster', shows that while greed and personal gain still dominate the motivations of company fraudsters, a fear of being undervalued or underpaid is also a factor in pushing individuals to cheat.

"The typical fraudster in the 2013 study is 36 to 45 years of age, is generally acting against his or her own organisation and is mostly employed in an executive, finance, operations or sales and marketing function," said the report.

"He or she holds a senior management position, was employed in the organisation in excess of six years and, in committing the fraud, frequently acted in concert with others."

KPMG conducted interviews with the international firms of 596 convicted fraudsters to gain an insight into fraudsters' profiles and motivations.

"Fraud, as with any crime, requires a motive," said the report. "And for the 596 fraudsters, the overwhelming reason for committing fraud is financial. The survey respondents were offered 14 possible motivations and could select as many as they believed appropriate. Out of a total of 1,082 motivations listed, 614 were motives of greed, financial gain and financial difficulty, and a further 114 were related to business targets. The only non-financial motive that comes close is sheer eagerness ("because I can") with 106."

The report said that the 614 motivations for financial gain covered a wide range of financial triggers. One such is a desire to enhance one's lifestyle.


"Typically, a person commits fraud to fund an extravagant, or at least very comfortable, lifestyle," said Anne van Heerden, partner and head of forensics for KPMG in Switzerland. "We seldom see people turn fraudster to make ends meet. Already well off, we often wonder why they take the risk."

Technology has also been a key enabler in modern fraud, according to senior KPMG managers in Ireland.

"The key change led by technology is the ease with which intellectual property can now walk out of an organisation," said Niamh Lambe, director and head of Forensics for KPMG in Ireland. "Companies do not seem to realise how exposed their systems are."

Ms Lambe also said that while having good internal controls was important, "with any control you are ultimately relying on the human element".

The report also said that a jail sentence was the fate of only 7pc of fraudsters, while criminal or civil litigation proceedings resulted for 35pc of offenders.

Some "55pc of fraudsters were dismissed from their jobs, thus raising the risk that fraudsters may commit crimes at other companies where they are subsequently employed in the absence of being prosecuted", added the report.

Irish Independent

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