Rising tide of fraud by middle managers revealed

A RISING tide of financial fraud by middle managers looking to maintain high standards of living was revealed in a survey today.

Research by business advisers PricewaterhouseCoopers identifies a ‘cappucino crime wave’ among UK companies.

The firm’s Global Economic Crime Survey of more than 3,000 senior representatives of organisations in 54 countries, found almost half of organisations in the UK had experienced some form of economic crime in the last 12 months.

Asset misappropriation (suffered by 77% of organisations reporting economic crime), was the most common; followed by financial statement fraud (40%).

The factors behind why employees turn to crime and the kind of individual most likely to commit fraud was also analysed.

PWC said there was strong evidence that economic pressures were  driving trends in financial statement fraud.

In the UK, fear of losing jobs (46%) was  cited as the biggest contributing reason, followed by targets being more difficult to attain (40%) and difficulties reaching the performance numbers to achieve bonuses (28%).

Nearly half  – 47% – of all economic crimes in the UK were perpetrated by middle managers, as opposed to junior or senior staff, up from 32% in 2007.

Three quarters – 77% said crimes had been committed to maintain current living standards, while the second most popular ‘rationalisation’ for economic crime was  a perception that the higher bonuses earned by others are unfair.
 
Both these measures are higher in the UK compared with the global sample.

Tony Parton, partner and leader of forensic services in the North West, said: ““We are in a perfect storm of economic crime right now with increased pressures and opportunities to commit fraud accompanied by fraudsters’ growing ability to convince themselves their actions are defensible.

“Fraudsters can come from anywhere, but those feeling the tightest financial pinch are more likely to get involved.

“Middle managers on middle incomes may have stretched themselves with high mortgage repayments or school fees and are now facing pay freezes and less certain prospects for future employment.”