By Andy Sambidge
Nearly 40% of firms likely to face corruption compared to global average of 23%, says PwC poll
More than a quarter of businesses and organisations in the Middle East reported economic crime in the last 12 months, according to PwC's Middle East Economic Crime Survey.
Twenty-eight percent of respondents said they had suffered, with asset misappropriation, bribery and corruption, cybercrime and accounting fraud cited as the main crimes.
Thirty-nine percent of respondents in the Middle East said their organisations were likely to face bribery and corruption in the next 12 months, a rate that is much higher than the global average of 23 percent.
The survey also revealed that fraud detection mechanisms in the Middle East were not as robust and two in five respondents reported that their organisations have not performed a fraud risk assessment in the last 12 months.
The survey said 69 percent of respondents indicated that most serious fraud incidents were committed by internal perpetrators, who are typically profiled as male, between 31 and 40 years old, a graduate degree holder and has been with the company for three to five years.
Almost half of Middle East respondents reported that incidents of fraud cost their organisations between $100,001 and $5m in the last 12 months.
Victims of economic crime also reported significant collateral damage due to fraud including significant negative effect on their reputation and brand (26 percent), employees' morale (23 percent), their business relations (20 percent) and their organisation's share price (six percent).
Tareq Haddad, PwC Middle East Forensic Services partner, said: "It is possible that more organisations in the Middle East suffer from economic crime but lack the robust detection mechanisms that would allow for accurate reporting.
"This is evident by the results of the survey that showed that 17 percent of known fraud was detected by accident compared to the global average of 8 percent. This emphasises the need for more robust fraud detection and investigation mechanisms in organisations in the Middle East."
The survey was based on a series of interviews with C-suite executives, senior vice presidents and heads of departments across Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Qatar, Saudi Arabia, the UAE and the West Bank Region.
Twenty-six percent of the respondents represented listed companies, 25 percent represented government owned enterprises and 42 percent were from organisations with more than 1,000 employees.