A third of Kiwi firms suffer in-house crime
Fraud affects a third of New Zealand businesses, with theft by far the most common, according to PwC's 2014 Global Economic Crime Survey.
Theft accounted for 70 per cent of fraud in New Zealand followed by procurement fraud, bribery and corruption, human resources fraud and cybercrime each making up between 11 per cent and 19 per cent.
However, New Zealand fared better than the global average of 37 per cent of workplaces being affected by economic crime.
In Australia 57 per cent of businesses had fallen victim to financial crime, according to the survey of 5000 respondents from 95 countries, including 82 from New Zealand .
PwC forensic services partner Eric Lucas said it was unclear whether New Zealand organisations were adequately monitoring and aware of fraud and security breaches, or simply not reporting them.
While it was hard to measure the cost of goods falling off the back of trucks, kickbacks, the theft of intellectual property and ideas, the financial costs were not the only concern, he said.
"Economic crime erodes employee morale, damages external relationships, tarnishes your reputation and the bottom line. This may explain why some fraud goes unreported."
For the first time, the survey asked about procurement fraud, reported by 19 per cent of New Zealand organisations affected by economic crime.
Procurement fraud is illegal conduct during the purchase process when the offender gains an advantage, avoids an obligation or causes damage to their organisation.
Procurement fraud is seen as a double threat, victimising businesses while buying goods and services, and their ability to compete for new opportunities, Lucas said. This type of fraud would become a greater threat as businesses increased investment as the economy gained momentum, he said.
Cybercrime was expected to double to 22 per cent of economic fraud during the next two years and businesses were taking the threat seriously, with 40 per cent worried about cyber threats and the lack of data security.
More than 80 per cent of Kiwi respondents were aware of new money laundering legislation, which came into effect last year.
"As trade with Asia increases, New Zealand businesses are increasingly exposed to countries which may have higher levels of corruption," Lucas said.
Encouragingly, the survey found 71 per cent had a whistleblowing system in place, with 37 per cent of crime detected through tip-offs.
- © Fairfax NZ News