ACC Calls In Serious Fraud Office

First it was the allegations of bribery and the ‘homes for sex’ scandal at Housing New Zealand, now it’s the behaviour of staff at the Accident Compensation Corporation (ACC) that’s causing concern.

The Accident Compensation Corporation (ACC) says it has referred “matters of concern” to the Serious Fraud Office (SFO).

“While investigating a staff member’s failure to follow internal policies and procedures other matters of concern were uncovered.  Owing to the nature, potential scale and duration of those matters we believed it was appropriate to refer them to the SFO”, said Dr Jan White, ACC Chief Executive.

“We have passed information to the SFO and will now await their consideration of whether a formal investigation is warranted.”

ACC says the worker has been dismissed for failing to follow policies and procedures.

Its board has told the Minister for ACC of the issue, as well as the State Services Commission, Department of Prime Minister and Cabinet, Department of Labour and Auditor General.

“Given that this situation is being considered by the SFO, ACC will not be making any further public comment at this stage,” Dr White said.”

Believe it or not New Zealand was recently placed top by Transparency International for being the country with the ‘least amount of corruption’.

Their data was based on the results of 13 independent surveys and has been used for a number of years to promote New Zealand as being a good place in which to do business.

Contrast that with PriceWaterhouseCoopers’ Global Economic Crime Survey that showed that NZ has higher rates of economic crime than its closest neighbours and is way above the world average and that corruption survey starts to look decidedly shaky.

The Global Economic Crime Survey, carried out annually by one of the world’s largest accountancy  professional services firms PriceWaterhouseCoopers, showed that a massive 42% of organisations in NZ had suffered from fraud in the last 12 months (against a global average of 30%) and 46% of it was committed by middle and senior management. The average fraud is costing around $500,000 in each business.

PWC is a Big Four auditor, alongside KPMG, Ernst &Young and Deloitte Touche Tohmatsu, so their report must carry some credence. This is the largest international survey of its kind with over 3,000 organisations taking part across 54 countries. 85 organisations from across the public and private sectors took part in the survey: From the PWC website:

  • Financial statement fraud was cited by 36%. Since (the) last survey in 2007 we have noticed a significant trend in the perpetrators of fraud towards middle and senior management. When we align that trend to the fact that New Zealand organisations say that staff reductions have resulted in fewer resources deployed on internal controls and that internal audit were being asked to do more work with less staff, we believe that there is cause for concern. It is people in middle and senior management that are more able to override controls within an organisation.”
  • Intellectual property theft was at 17%.
  • In 72% of all cases the fraud was committed by someone inside the organisation.

“(The) survey shows that economic crime continues to be a serious issue affecting New Zealand organisations with the current economic crisis increasing the pressures and incentives to commit fraud. New Zealand had the eighth highest reported level of fraud across the 54 countries that took part, with 42% of our respondents saying that they suffered from some form of economic crime in the last 12 months. The average cost of fraud in New Zealand was $491,506 with one organisation reporting that economic crime cost them in excess of $7 million in the last 12 months.”

If the outcome of the ACC’s investigation are ever made public we’ll be sure to mention it.

See also:

A Work and Income employee faces two years’ jail after using false identities and inventing a child to defraud more than $36,000. Letitia Lilly Anne Proctor, 23, pleaded guilty in Palmerston North District Court yesterday to four charges of fraud and one of computer crime carried out between August 27, 2008, and May 27 this year.

She had worked for the Social Development Ministry since April 2006 and was a case manager at the Work and Income Palmerston North branch from July last year…In total, Proctor defrauded the Social Development Ministry of $27,529 but the ministry was unable to claim back the $10,433 she received through computer fraud.”