White Collar Crime Expected to Rise as Result of Global Recession
Posted: Thursday, April 9th, 2009 at 3:58 pm
According to experts at financial giant PricewaterhouseCooper, the global economic recession will have an additional impact besides rising prices, falling stock markets, and the decline of consumer confidence: an increase in white-collar crime.
The recession’s impact on fraud is two-fold. First, predict forensic accountants, fraud will increase across the board. With lucrative bonuses being reduced or eliminated, sales targets becoming harder to achieve, and general increases in the cost of living, salespeople, executives and managers alike are finding it harder to maintain ethical behavior in the workplace.
Secondly, greater effort is being made on the part of federal, industry-wide, and internal fraud and security departments to crack down on white-collar crime. In the wake of Bernhard Madoff’s recent high-profile Ponzi scheme and subsequent conviction, prosecutors are aggressively pursuing criminal activity at the corporate level.
Financial fraud is not the only variety to affect corporations during the economic downtown, PwC officials say. Fraudulent practices run the gamut from falsified credentials on a resume or job application, to increased data and identity theft, to deliberate exaggeration or misrepresentation of data such as sales figures or subscriber numbers.
In order to combat fraud and other white-collar crimes such as embezzlement, corporate governance efforts should be stepped up. Companies will need to implement a strategic, coordinated plan that encompasses screening and risk assessment of potential employees and clients, monitoring of existing workers, and protection for whistle-blowers. Data analytics and other anti-fraud measures can also help protect companies and prevent scandal.
Although financial and banking service industries seem especially vulnerable to fraud at the corporate level, other sectors such as computer and telecommunications industries and health care companies are also susceptible. And while greater incidences of street crime have long been associated with economic downturns, the large scale of corporate dealings and the large amounts of cash and assets that are traded by white-collar industries, make fraud on this level particularly insidious. Financial experts warn that the bulk of fraud committed since the onset of the credit crunch in August 2007 has yet to be discovered. Prosecutors who specialize in high-level corporate fraud cases should expect to see their workload rise dramatically as more and more cases are brought to court.
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