Large Scale Fraud in NZ Exceeds $72 Milllion in 6 Months – “Tip Of Iceberg”

Fraud in New Zealand

New Zealand, the country perceived to have the ‘lowest rates of corruption’ has suffered more than $72 million dollars worth of fraud in the first six months of 2010, but that is only the “tip of the iceberg” says KPMG forensics expert Stephen Bell.

According to an article on Stuff:

Cash-strapped Kiwis bitten by recession have resorted to fraud and the full extent of it will not be known for years.

New Zealanders have swindled about $240.6m in large frauds since January 2008 and the average size of large frauds is now more than $2m, KPMG’s latest large-scale fraud survey shows.

KPMG forensics partner Stephen Bell said the extremely high level of fraud was not surprising given the backdrop of the recession.

“We haven’t seen the end of it. In the past 12 months there’s been about $150m in large recorded fraud. Our expectation for 2010 is that it will be a record year. Typically the second half of the year is larger in terms of reported frauds and their dollar value.”

KPMG monitors cases coming before the courts that exceed $100,000 and the individuals involved must be charged or sentenced for their case to be counted.

The report revealed just the tip of the fraud iceberg, Mr Bell said.

Business New Zealand chief executive Phil O’Reilly said the actual level of fraud for the period was likely to be much higher than $72m as the most common kind of fraud was small-scale.

“You can probably double that number – that’s a guess but the [value of small-scale fraud] will be a big number.

“One of the issues is that companies either don’t find out about it or if they do, they often keep it a bit quiet because of the corporate reputational harm that’s done by admitting you’ve got a problem.

Any business handling cash or dealing with complex financial transactions would be at risk of fraud “at some time”, but it was important to remember the vast majority of employees were honest, he said…more here

For background reading about the lack of controls over the high levels of fraud perpetrated in New Zealand read blog:

Kiwis use fraud to maintain lavish lifestyles

ACC calls in Serious Fraud Office