Fraud more than doubles in Gulf

Fraud has more than doubled in the GCC in the last three years with total losses for 2007 hitting $45 million, a new report has revealed.

The study by international audit and advisory firm KPMG shows that 40% of firms in the region now see fraud as a major hurdle for conducting business here, UAE daily Emirates Business 24/7 reported on Tuesday.

“One of the findings that is certain from the survey is that incidence of fraud has increased in the financial and real estate sectors,” Colin Lobo, a partner at KPMG's forensic department, told the newspaper.

“There have been a spate of frauds in the two sectors, and it can be well tied to the economic boom they have witnessed."

The study reveals that 90% of white-collar crimes are committed by the companies’ own staff, with almost two-thirds of the perpetrators being from upper or senior management levels.

Lobo said the booming markets in the Gulf make it an attractive and lucrative location for conmen.

“High economic growth probably makes markets vulnerable to conmen who flock to the bait,” he said.

Lobo also said that theft was becoming an increasing problem as well.

“This again has much to do with the economic scenario where even the market place is witnessing an increase in pilfering,” he said.

While the trend of white-collar crime is on the rise, the study also indicates a growing willingness of firms to initiate legal action against those suspected of fraud.

“This shows that government initiatives towards tackling the problem are considered an effective remedy in stemming fraudulent practices,” Robert Chandler, partner at KPMG, told Emirates Business.

When the report was compiled in 2004, less than 5% of all fraudulent acts were reported to the appropriate authorities.

According to the profile provided in the report, 70% of fraudsters are aged between 36 and 55 and 85% are men.

More than 300 organisations in the Gulf took part in the survey.