The most recent KPMG Forensic Fraud Barometer shows that Swiss courts tried 57 cases of white-collar crime in 2016. While this might be significantly fewer cases than the year before, the total losses exceeded CHF 1.4 billion, a record high since KPMG began gathering data. The average loss incurred by investors was CHF 165 million while losses in cases involving the federal government came to CHF 13 million on average.
Last year, 57 cases of white-collar crime caused losses of CHF 1.4 billion in Switzerland. This is one of the findings presented in the latest issue of the KPMG Forensic Fraud Barometer which analyzes court cases tried in public and reported in the media every year. One striking difference over the previous year is the extremely high value of total losses incurred which rose from CHF 280 million to CHF 1.4 billion. This all-time high is mainly attributable to one case involving a loss of CHF 800 million and three cases involving amounts of more than CHF 125 million each.
Investors (both private and institutional) were the hardest-hit group of victims in 2016. Total losses within this group came to around CHF 1.16 billion which also translates to the highest average loss per incident, namely CHF 165 million. These cases frequently featured independent asset managers and foreign currency dealers as perpetrators.
The second-highest total loss of around CHF 159 million was reported in the public sector. Here, however, the average per-case loss was comparatively low at CHF 13 million. In the previous year, private individuals and non-commercial organizations suffered most as a result of white-collar crime.
Professional and simple fraud were the most frequent white-collar crimes reported in the past year. The perpetrators were often motivated by a desire to finance an extravagant lifestyle (13 cases) or to avert their own company’s bankruptcy (7 cases).
By virtue of their positions and the greater freedom afforded them, executives pose the greatest threat within a company: Members of senior management were solely responsible for these crimes in 58% of all cases and cooperated with other employees in another 21% of the cases.
“These new figures demonstrate the enormous damage potential of white-collar crime, particularly when committed by in-house groups of perpetrators and especially members of senior management. Accordingly, active preventive measures within the organizations are all the more vital,” says Philippe Fleury, Head of Forensic at KPMG Switzerland, in reference to the findings.
In September 2016 and following some 12 years of preparations for the trial, the Federal Criminal Court in Bellinzona reached a verdict in the biggest case of fraud in Switzerland’s recent history. Around 2,000 people suffered losses as a result of this instance of professional investment fraud, a so-called snowball system.
In another case, the chairman of the board of directors, the former managing director and a client advisor of the custodian bank of an investment firm embezzled around CHF 170 million. The victims in this case were 2,500 clients.
The KPMG Forensic Fraud Barometer is based on cases of white-collar crime that were tried 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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