Losses resulting from financial crime in the Gulf region are likely to run into billions of dollars per annum, a survey released here has revealed.
DUBAI: Losses resulting from financial crime in the Gulf region are likely to run into billions of dollars per annum, a survey released here has revealed.
KPMG's GCC Fraud survey (2008) released here on Tuesday says the respondents to the survey reported individual losses of some USD 100 million attributed to financial misappropriation.
More than 40 per cent of respondents in the survey believe that fraud and misconduct is a major problem when undertaking business in the region and 60 per cent of respondents expect the level of fraud to increase in the next two years.
"The current financial crisis that the World is experiencing is creating an environment where the risk of fraud will increase as businesses come under pressure to show results.
Likewise, individuals will also be tempted where costs are rising and income levels are flat" said Colin Lobo, Partner Forensic Services at KPMG.
"Perhaps because of the buoyant regional economies, management of fraud risk was not hitherto at the top of the agenda. In some other markets, radical measures have been taken as a result of massive individual frauds or because frauds have been identified during a downturn i n the economy", he said.
KPMG's another forensic partner, Robert Chandler, stressed the need for management time to be spent focussing on understanding current characteristics related to fraud and misconduct.
"Organisations in the region appear to have varying levels of understanding as regards the optimal framework for fraud management strategies. At times, they tend to be quite general rather than specific organisation/business focussed", Chandler said.
The survey indicates that frauds perpetrated by management and employees accounted for the bulk of fraud incidents and that internal controls were partially effective in helping to detect fraud.
While an aid to undertaking business, the advent of new technology also poses greater challenges for the detection of fraud and the need for internal controls to be reassessed and updated as the underlying nature of businesses develop.
The report also provides a typical profile of a fraudster and emerging issues including those relating to Intellectual Property and the US Foreign Corrupt Practices Act (and similar legislation in other countries) on organisations in the region.
The report has been made public at a time when Dubai has been plagued by a series of scandals in recent months and several businessmen have been held on fraud charges.
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