Investigating the Impact of Fraud and Corruption on Economic Development Jenny Reid Director
1410 investigating the impact of fraud & corruption on economic development
Jun 21, 2015
Investigating the impact of fraud and corruption on economic development.
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Investigating the Impact of Fraud and Corruption on Economic Development
Jenny Reid
Director
Definition of Corruption
Corruption has been described “as the abuse of public office for private gain.”
Is corruption limited to public office?
Economic Impact of Corruption
Corruption is the abuse of entrusted power for private gain. It hurts everyone who depends on the integrity of
people in a position of authority.
Economic Impact of Corruption
Corrupt activity • Hinders development, • Contributes to the depletion of
the budget,• Distorts markets, • Hinders local & foreign
investment.
Economic Impact of Corruption
Corrupt activity • Interrupts investment – 20% more
expensive to invest in a corrupt country
• Restricts trade• Reduces Economic Growth• Increases Poverty• Hinders job creation
Economic Crime is a Global Concern69% of respondents to a survey in 2014 indicated they had been a victim of some economic crime in
the past 24%
Typical organisation loses 5% of revenue to fraud
Global fraud = $3.7 trillion
Lack of Integrity
Bad Attitude
Perception of not being caught
Dissatisfied Employees
Personal Insecurity
Bad Governance
Human Greed
Causes of Internal Fraud & Corruption
Most Common Categories of Fraud
Asset Misappropriation
– 85%
Corruption – 37%
Financial Statement fraud
– 9%
Fraud
Owners / Executives19% of cases
Average loss - $500 000
Employees42% of cases
Average loss - $75 000
Managers36% of cases
Average loss - $130 000
4+ peopleAverage loss - $500 000
Single personAverage loss - $80 000
2 peopleAverage loss - $200 000
3 peopleAverage loss - $355 000
Accounting
Operations
Sales
Executives
Customer Service
Procurement
Finance
Common Denominator
RED FLAGS
Rising costs of goods & srevices
Slow delivery / Poor Performance
Rapidly increasing number of orders / Excessive orders
Manipulation of tender scheme
Paying above average prices
Last bidder always wins the tender
FRAUD PREVENTION DATABASE
Existing employees /
Students
Past employees /
Students
Outsourced / temporary employees
Key personnel in
suppliers
Potentials employees /
Students
Industry Database
FraudPreventionDatabase
WHAT DOES A BAD HIRE COST YOUR COMPANY?
Third Party Risk
Temporary Staff
Outsourced Labour
SuppliersClients
Contractors
Is this happening in your organisation?
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