Manager theft up 20pc in a year

Fraud Hits Kiwi Business

Fairfax Media

SHOCKING: Fraud is rife in the workplace, with tough times driving middle management employees to plunder company funds to fix their own financial woes.

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Fraud is rife in the workplace, with tough times driving middle management employees to plunder company funds to fix their own financial woes.

A report from tax and accountancy specialist PricewaterhouseCoopers says over 40 per cent of New Zealand organisations were victims of fraud in the last year, with the number of crimes committed by senior and middle management jumping 20 per cent.

The sharp rise saw New Zealand ranked eighth highest for rates of fraud among the 54 countries surveyed; Russia topped the list while Japan brought up the rear.

"I don't think New Zealand is as crime or fraud free as people think," said PwC forensic services director Alex Tan.

"Most prevalent here is what we call 'asset misappropriation', or stealing money. That's what people in New Zealand like, they like stealing the money."

On average, Kiwi organisations that responded to the survey were diddled out of $500,000 in the past 12 months - one business reported losses in excess of $7 million.

Desperate times call for desperate measures, say those tasked with weeding out the guilty.

Institute of Professional Investigators chairman Ron McQuilter says his own firm is a third busier with corporate theft and fraud than a year ago. And that does not include insurance related fraud, which is up as well.

"It used to be the storeman and the truck driver, but today we're seeing managers involved for all sorts of reasons," he said. "We've sacked chief financial officers of companies, where as before it was the chief financial officers who used to call us."

Private investigators say the recession has prompted many businesses to rein in perks and bonuses, which has driven their once loyal managers to dishonesty in a bid to balance the household books.

Other excuses unearthed during investigations included a shortage of overtime and the threat of redundancy, while the need to fuel drug addiction was worryingly high.

"You need money to fund the habit and that's the guts of it. It's the two 'B's'. You're either going to rob the bank or rob your boss," said Advanced Investigations' Michael Campbell.

An ex-CIB senior sergeant in the New Zealand police, Mr Campbell says management are integral to organised corporate crime because without them many scams would not get off the ground.

"It might start with turning a blind eye, but once [management] get hooked in the pressure builds on them for a bit more here and a bit more there, then the money becomes good and the rot really spreads."

Earlier this year nine bus drivers were sacked after alleging swindling Go Wellington of $20,000 worth of bus fares between May and June - the scam was reportedly worth $500,000 over three years.

Then there was the $2m Coca Cola scam in south Auckland where a racket of workers allegedly swiped thousands of bottles of the soft drink which were sold to dairies at knock down prices.

"When times are good and the profits are rolling it's all hunky dory. But once the belt-tightening starts you'd be amazed just how many are willing to put their hand in the till," said Mr McQuilter.