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Jane Moir

Serious fraud is still rife in the workplace, with latest police figures showing reported losses of HK$1.69 billion in the first six months of the year.

However, this may only be the tip of the iceberg. Less than one in five serious fraud victims who enlist the help of corporate investigators actually make a complaint to police, according to forensic accountants. Real losses from corporate fraud could thus be much higher. Serious fraud involves sums of HK$5 million or more.

The official figures have shown a downturn in terms of the number of complaints lodged with police, with 43 in the first six months of the year.

Although this is on track to match last year's total of 93, it is unlikely to come near the 147 serious fraud complaints made to police in 1998.

Reported losses have however remained relatively static: with HK$3.83 billion claimed missing in 1998 and HK$3.33 billion last year.

If losses continue to be reported at the same rate as they have been so far this year, the total for 2000 may outstrip last year's.

The figures were released yesterday by Director of Crime and Security Lau Chun-sing and Assistant Commissioner of Police (crime) Peter Yam Tat-wing as part of the force's overall first-half statistics.

In the period, there was a 5.4 per cent increase in the total number of crimes compared to the same period last year. The overall detection rate stands at 41.7 per cent.

ICAC figures show 44 corruption reports concerning banks lodged in the first six months of this year, compared to 43 in the period last year. For the whole of last year the figure was 98.

As far as corporate fraud is concerned however, it is difficult to take official statistics at face value, according to KPMG's head of litigation (fraud investigation services), Mark Bowra. 'It is hard to take these numbers and jump to conclusions . . . in many ways it is a matter of speaking to the various companies themselves.'

Although there does seem to have been an increase in problems 'flushed out' as a result of the Asian financial crisis, 'some of them are old, some of them are new', he said.

'It is not a simple way of saying 'it is because of economic times and economic pressures' put on people.'

Mike Watson, head of fraud investigations at KPMG - and a former commercial crimes officer - said, however, that 'less than 20 per cent' of corporations take serious fraud complaints to police.

Firms initially are concerned with stemming the fraud, stopping the existing losses and then attempting to recover some of the assets.

Although taking the case to the police may give clients satisfaction that the criminal has been dealt with to the letter of the law, 'chances are, that is not going to help their corporation as such', Mr Watson said. His contentions are supported by professional services firm Ernst & Young which recently found 60 per cent of respondents in a survey of 700 organisations from 15 countries have suffered a fraud in the space of 12 months.

About 10 per cent suffered more than 50 incidences, with around 50 per cent in banking and financial services organisations. The report found that 82 per cent of cases identified were committed by employees. Only 38 per cent were prosecuted, and 28 per cent were dismissed.



Six months' $1.69b corporate hit considered tip of the iceberg