Tech-savvy young, high performers commit more corporate fraud: study
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Bengaluru: Youngsters are great with technology, hard working and have new skill sets, but in India, what they are equally capable of is committing frauds.
Globally, fraudsters are typically senior employees who have put in many years at the company. But in India, it is the younger employees who are involved in fraud. A global profile of about 750 fraudsters done by consultancy KPMG found that among Indian fraudsters, 32% were in the 26-35 age group, compared with just 14%, globally.
“India finds an increasing number of fraudsters in the one to four years of service, indicating that not only is the Indian fraudster younger, but also starts early,” said Jagvinder Brar, partner, forensic services, KPMG in India.
The youngsters’ tech-savviness makes them well-positioned to commit these frauds and they end up taking advantage of the weak controls in the system. In fact, more Indians (69%) were able to override controls than those globally (44%).
Technology has played a significant role in this, as 33% of frauds in India were tech-enabled while globally, it was 19%. And it is the high performers who are more likely to be unethical, found the study, as they have a greater desire to show better performance than is real.
64% of fraudsters in India are high performers, compared with 38% globally.
Indians also find comfort in numbers when it comes to committing frauds. In high-growth markets like India, more fraudsters colluded when compared with developed markets, where fraudsters preferred to act solo, found the study.
62% of frauds are committed in collusion in India. The groups that are colluding are also quite large — collusion involving more than five people increased from 9% in 2010 to 20% in 2015.
Such a large group of scamsters are a serious concern for Indian companies.
“Colluders inflict much more damage than individuals. Larger the group, bigger the damage,” said Mohit Bahl, partner and head, forensic services, KPMG in India.
34% of collusive fraudsters cost the company $1 million or more, compared with 16% for soloists, said Bahl.
Such large groups include outside parties colluding with employees.
“A strong third party risk management programme which ensures comprehensive due diligence is carried out on vendors, channel partners and suppliers, is a sound way of combating fraud and assessing risks regularly,” Bahl said.
Finally, when you look at what motivates the fraudsters, the answer is simple: greed. In India, greed is the predominant motivation for 77% of fraudsters, compared with 60% globally.
The most-prevalent fraud surveyed globally is the misappropriation of assets (44%). This mainly includes embezzlement and procurement fraud followed by fraudulent financial reporting.
CV fraud is a significant trend observed in India. 13% of the cases checked by KPMG in India’s verifications practice indicated discrepancies in CVs. Primary areas of fudging include education certifications, addresses and past employment records.