Fraud will thrive in poor economy

A DOWNTURN in the economy will result in an increase in incidents of fraudulent activity, which could cost Irish businesses millions of euro.

This is according to the former head of the Criminal Assets Bureau (CAB), Felix McKenna, who said Irish businesses need to be more aware than ever when it comes to identifying fraud.

He said people who have got themselves into situations where they can’t afford to pay bills or mortgages or are faced with unemployment might see what they can extract from the firm at which they work.

“A person can be living a very lawful life until maybe 55 and suddenly they’re sacked or they get word they’re being sacked and say, ‘I’ve been here for 35 years’, and if they are in a position of control [they] will walk away with a lot of money,” said Mr McKenna.

The majority of internal frauds are generally discovered through canteen rumour or from a whistle blower. “There’s usually more information to be gathered at the canteen table than in the board room.”

Mr McKenna, who is employed as an adviser by KPMG, said fraudsters could create a false system where there are invoices coming in for work and get them all signed off fraudulently.

“He understands the system so well that it’ll only be through the luck of somebody asking what happened to that money or I never saw the end result of that.”

Mr McKenna added that it’s difficult to profile fraudsters because they can come from anywhere in society.

“Companies have to adopt a culture of anti-fraud measures such as random checking systems. The boss people need to have a zero tolerance approach to fraud.”

Mark Fielding, chief executive of small firms organisation, ISME, said when there’s a downturn in the economy there is likely to be an increase in the level of crimes perpetrated by staff.

He said it’s very important for firms to install internal control measures.