Author: Raquel Balarin

Source: Valor Econômico, 24/09/2007

A worldwide survey to be released today by risk consultancy Kroll points out that, in the past three years, four out of five companies have suffered some type of fraud. The most alarming data comes from Latin America. In the region, 45% of the 900 senior executives interviewed believe that the level of corporate fraud is slightly higher or much higher today, compared to three years ago. Second place comes the Middle East and Africa, with 44%.

For the executive director of Kroll in Brazil, Eduardo Gomide, the leadership of Latin America in the growth of the number of corporate frauds may reflect the new rules imposed by the Sarbanes-Oxley Act, in the United States, after the scandals of Enron and WorldCom. “The subsidiaries of the multinationals and the companies here with shares listed in the USA now have more restrictive rules. It became mandatory for the executive to curb fraud, ”explains Gomide.

Although the perception of the number of frauds is great, the research - carried out in partnership with the Economist Intelligence Unit (EIU) - also reveals that, in the region, the values ​​of the losses suffered are lower. Just over a third of responses (36%) indicated that fraud generated an annual cost of less than US $ 100, 20% between US $ 100 and US $ 1 million, 7% between US $ 1 million and US $ 25 million and only 2% between $ 25 million and $ 50 million. No losses above that have been reported in Latin America.

In Western Europe and Eastern Europe, the impact of fraud exceeds US $ 100 million for 3% of those surveyed and in North America, 2%. “In developed countries, frauds are often accounting, carried out to deceive investors and have a great impact. In Eastern Europe and Africa, we have organized crime, the mafias ”, says Gomide.

The most frequent cause of increased exposure to fraud is the high turnover of employees, with 32%. This problem is greater in the Asia / Pacific region (40%) and lesser in North America (25%).

Kroll's executive director points out that, in addition to the diversion of physical assets and accounting issues, the survey also focused on intellectual property, to detect cases of piracy or theft of strategic information. And that is the main concern of the interviewees - about 20% of them consider themselves highly vulnerable to theft, loss or attacks of information. And 31% believe that the increasing complexity of technology systems is increasing their exposure to fraud. It is the second biggest cause, behind employee turnover.

Companies are increasingly dependent on technology and with an increasingly lean professional structure. This, according to Gomide, leads people to have more obligations, without some tasks being segregated. The same employee may be responsible for receiving vendor bills and making payment, which helps to facilitate fraud.

“In companies, fraud discoveries are often due to a co-worker, who identifies something strange. The only industry that has well-developed systems for detecting fraud is finance, ”says Vander Giordano, from Kroll Latin America. For this reason, more than adopting complex rules to curb fraud, the risk consultancy has been arguing that companies have to gather as much data as possible and make correlations, as banks already do.

Although it is the best prepared to detect fraud - both technologically and in internal controls - the financial system is also the one that suffers the most losses. The loss of the last three years by institution is more than double the average of the companies analyzed. In addition to it, the health, pharmaceutical and biotechnology industries also suffer above average losses (75% above average); natural resources (which includes mining and energy, for example) and manufacturing. In these cases, the number of frauds is often lower than in other sectors, but the amount involved is much higher.

In the natural resources industry, in addition to the foreseeable fraud of misappropriation of physical assets, Kroll noted that a fifth of executives considered their companies highly vulnerable to corruption, almost twice the average. One of the causes may be the fact that this industry is exploited in countries commonly listed among the most corrupt in the world.

The survey also reveals that 39% of respondents in the Middle East and Africa have been threatened by corruption and bribery in the past three years. In Latin America, this index is 29% and in North America, 9%. "It is clear that countries with a greater presence of the State in the economy have a higher incidence of corruption and bribery," says Gomide.