Global Economic Crime Survey 2005
A Must-Read for Corporate Executives. Fraud Risk Management systems are over-trusted, and Companies are still underreporting instances of economic crime. Large Companies are reporting about One-Third more instances than small Companies; this does not indicate better supervision at the small Company-level, as the Survey were more likely to be questioning the senior Executives who were engaged in Economic crime at the small Company. Senior Executives were shown to be more likely to engage in economic crimes, while the incidence of severe punishment was much lower than for Middle Management or Workers.
The level of citement of maintaining lifestyle as cause for engagement in economic crime implies that the senior Executive Pay Packages have grown too rapidly. Middle and upper Management will foster economic crime to match the Payscale of better-paid senior Executives.
there has been a 71% increase in the
number reporting corruption & bribery,
a 133% increase in the number
reporting money laundering, and a
140% increase in the number reporting
Company Employees are losing their allegiance to their Organizations due to the wide disparity in Compensation in this Author's estimation. The old factors, cited by this Report as beneficial to forestalling economic crime, are likely to nullify as senior Management gorges itself on high Pay Packages.
The Problem is not going to go away, and it is bad:
45% of companies worldwide have
fallen victim to economic crime in the
past two years – an 8 percentage point
increase on our previous survey.
The only effective control may be Stockholder demand that all Pay Packages retain some relationship to Earnings potential. lgl