Tough times means more corporate fraud, says Kroll

Information theft is the fastest growing fraud within corporations, according to the Kroll Global Fraud report.
The investigation service Kroll has published its second Global Fraud report in conjunction with the Economist Intelligence Unit. It indicates that malfeasance within companies seems to be growing. Four out of five companies have had problems in the last three years.

In Asia, physical theft is the most common problem, having affected 41% of respondents. In second place in the roll of dishonour is information and intellectual property theft, with 31% of companies finding themselves a victim in Asia. In a global context, information theft is the fastest growing type of fraud that is currently being encountered by firms.

This year, the surveyÆs financial services focus falls upon the hazards to be found within hedging contracts in futures markets trading. Kroll notes that while trading is for the most part well regulated, there is still the latitude for hedging fraud via cross-trading, front running, protected trading and the use of dual accounts.

Whistleblowers are a conundrum in the fight against fraud. Kroll says it helps firms put in place discreet, internal systems via which whistleblowers can step forward, theoretically unafraid of speaking up, so that they donÆt feel like blurting out their findings outside, for example to the police.

However, Kroll finds that the most common response from companies is to try and unmask the whistleblower, in a way that implies they are behaving more as a troublemaker. Kroll says that firms should try to learn something from their whistleblowers, rather than penalise them for speaking out.

If you happen to be leaving your place of work either willingly or involuntarily, be careful what you put in your cardboard box. While your home cannot be searched by an employer without a court order, you might be in possession of something you are not entitled to.

In Hong Kong, client lists belong to the company as do the boxes full of business cards that you have collected. However, the actual information itself printed on the business card is public information because it is used for the purposes of external marketing.

ôInformation usually has an intangible value in the hands of a competitor or someone with a devious will, and it can cause a lot of damage to either the reputation or bottom line of a company,ö says Sharon McCarthy, associate managing director of Kroll in Hong Kong. ôThat information includes strategy material, client lists, R&D projects, product IP, and computer passwords. They can cause all sorts of havoc in the wrong hands. We may conduct reviews of electronically stored material and determine who printed the client information or who downloaded it. Concurrently, we may be undertaking background research on the employee and looking for evidence external to the organisation. Maybe they or a family member have set up a business in conflict with the clients.ö

What is more, investigators can find evidence just about anywhere that is a physical or electronic medium. These include webmail services, Blackberries, telephone lines.

ôI wouldnÆt say fraud and corruption is an Asian æthingÆ, because there is fraud in western countries too,ö says Anne Tiedemann, regional managing director for Kroll in Greater China and Southeast Asia. ôThere may be opportunity here though to commit such acts because legal systems are still developing. But there are moves now towards improved transparency in Asia.ö
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