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IGNORE: ‘Dramatic spike’ in travel fraud
Saturday, 19 Oct, 2009
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A “dramatic spike” in fraud levels has seen companies in the travel, leisure and transportation sectors are losing an average of $10.2 million.
The figure was up 75% on last year’s total loss which stood at $2.5 million, according to a survey Kroll commissioned from the Economist Intelligence Unit of more than 700 senior executives worldwide.
Travel, leisure & transportation firms suffer from a broad range of incidences of fraud, rather than one dominant one, the study shows.
In the last three years almost half (47%) experienced theft of physical assets – the third highest rate of any industry; almost a third (32%) faced internal financial fraud and just under a third (30%) regulatory or compliance breaches – in both cases the greatest proportion of any sector.
A quarter (26%) also suffered from management conflict of interest – the second worst performance of all sectors surveyed.
The industry is addressing the issue through greater anti-fraud spending with near or above average figures in its deployment of anti-fraud measures covered in the survey.
But efforts are inconsistent and hampered by cost saving measures in light of current trading conditions.
Cost cutting has led to a quarter of companies admitting that efforts to save money have weakened internal controls and increased vulnerability to fraud – the worst result for any industry.
Richard Abbey, managing director in Kroll’s Financial Investigations practice, said:“Any crime needs both a motive and an opportunity.
“The economic downturn has provided increased motive for fraud – perhaps turning previously honest employees to crime in light of lower financial rewards or pressure to meet financial targets.
“However, at the same time, the decline in liquidity has also reduced the opportunity for the determined fraudster.”
“Our report highlights how motive and opportunity for committing crime have effectively cancelled one another out in the past year, but this apparent steady rate of fraud may be a false dawn.
“As we emerge from recession, both businesses and investors should be extra vigilant as we are likely to witness a different set of motivations, with the corporate saviour replaced, once again, by the activities of sophisticated criminals starved of opportunity in recent times.”
The Kroll Annual Global Fraud Report revealed fraud activity worldwide remained steady in 2009. Companies lost an average $8.8 million to fraud, up just seven per cent on last year’s figure which stood at $8.2 million.
Fraud levels varied markedly by sector with five industries including travel, leisure & transportation experiencing a rise in fraud losses (travel, leisure & transportation; financial services; professional services; retail, wholesale & distribution; and healthcare, pharmaceuticals & biotechnology) while five sectors experienced declines (manufacturing; technology; media & telecoms; natural resources; and consumer goods & construction).
by Phil Davies
Phil Davies
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