The latest ‘KPMG Forensic Fraud Barometer’ reveals that Swiss courts processed 91 cases of white-collar crime last year, a record number. At CHF 280 million, however, total losses have fallen to their lowest level in eight years. The average loss per case was around CHF 3 million.
The results of this year’s ‘KPMG Forensic Fraud Barometer’ appear contradictory at first glance. On the one hand, the number of major cases of white-collar crime has increased year on year to 91, a record since KPMG started gathering data systematically in 2008. On the other hand, however, the total losses have decreased markedly in comparison with last year, down from a total of CHF 537.2 million to CHF 280 million. On average, each case had a loss of CHF 3 million.
The apparent contradiction in these findings can be explained by the fact that the previous years’ results had been skewed to an extent by a few extremely large cases involving losses of over CHF 100 million. Over the past few years, fraud, bribery and corruption have also attracted greater public attention, which has also raised awareness of the issue within organizations and has meant that significantly more fraud prevention measures are being implemented these days. There has also been a strong focus in recent years on setting up new compliance programs, policies, codes of conduct and whistleblower mechanisms within bigger organizations.
With either employees or executives responsible in 40 percent of cases, there has been a slight fall overall in the percentage of crimes perpetrated internally. However, the past few years have seen a shift away from executives and toward employees in terms of who the actual culprits are. “This shows that groups of perpetrators within the company itself continue to pose a major threat in terms of it falling victim to fraud,” says Philippe Fleury, Head of Forensic at KPMG Switzerland, commenting on the results.
Example 1: Bank manager jailed
A court sentenced a former branch manager to five years in prison for embezzling around CHF 10 million from clients over a ten-year period.
The group of ‘other’ victims, a category that includes private individuals, charities and non-governmental organizations, has grown considerably. Unlike commercial organizations, private individuals in particular do not usually have many preventive measures in place to prevent fraud and embezzlement, if indeed they have any at all. As a result, wealthy individuals who are in a relationship of dependency are an especially popular target.“With professional organizations having increased their preventive measures, it may become increasingly attractive for fraudsters to target non-professional ones and individuals in the future,” Philippe Fleury adds.
Example 2: Minister embezzles funds
For several years, a Church minister plundered the bank account of an intellectually disabled person under his guardianship. The minister was able to access the account in his capacity as the person’s official deputy, withdrawing funds more than 400 times and embezzling over CHF 250,000 in all.
The ‘KPMG Forensic Fraud Barometer’ is based on cases of white-collar crime that were closed by a Swiss criminal court during the year under review in which losses amounted to at least CHF 50,000 and which were reported in Switzerland’s main daily and weekly newspapers.
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