Over a third of respondents surveyed as part of a new Middle East report released on Wednesday said they had reported fraud or economic crime in their organisation in the last two years, with nearly half of the incidents perpetrated by internal managers or members of staff.

Here is a summary of the main findings from PwC’s report “2018 Middle East Economic Crime and Fraud Survey - Pulling fraud out of the shadows”:

• 34 percent of respondents reported fraud and/or economic crime in their organisations in the last two years, up from 26 percent in 2016.
• 20 percent of the cases were discovered as a result of internal audits.
• 18 percent were discovered as a result of internal tip-offs.
• 46 percent of respondents said the cost of such crimes ranged from $100,000 up to $50 million.
• 29 percent of organisations think that cybercrime is likely to be the most disruptive fraud and/or economic crime in the next 24 months.
• 82 percent of respondents said continuous real-time monitoring will help to combat fraud.
• 48 percent of the economic crimes in the Middle East were perpetrated by internal members of staff, compared to the global average of 52 percent.
• 62 percent of economic crimes reported were carried out by senior and middle management.
• 77 percent of respondents said their company had carried out a fraud and economic crime risk assessment within the past 24 months, compared to 47 percent in 2016.
• 52 percent of respondents said the use of email monitoring was a valuable technique in combating fraud
• 42 percent said they had seen an increase in the amount of money allocated to combating fraud and economic crime within the past 24 months.
• 49 percent plan to increase the amount of funds allocated to detecting fraud over the next 24 months, compared to a global figure of 44 percent.

(Read the results of the full report here)

“Technology is proving to be a strong ally. Organisations in the Middle East are making growing use of technology in their anti-fraud efforts, with 82 percent agreeing that using technology for real time monitoring assists in combating fraud,” Nick Robinson, forensic leader at PwC Middle East, was quoted as saying in a press release issued with the survey’s results.

“Preventing and discovering fraud in organisations is not an easy task. It involves a focus on culture and people, in addition to investing in controls and technology. Organisations in the Middle East having formal business ethics and compliance programs increased from 79 percent to 82 percent in the last 24 months,” Tareq Haddad, investigations leader at PwC Middle East, added.

Earlier this year, Thomson Reuters Projects (TRP) issued a white paper looking at the challenges of bribery, fraud and corruption in the construction industry, which was based on a panel discussion it organised during The Big 5 trade show in November 2017.

Nabil Al Ouf, a senior consultant at Dubai’s Virginia Institute of Finance, told delegates at the TRP event that his former firm, Dragon Oil, set up a hotline for whistle-blowers, which was run by an independent British company.

A whistle-blower could call to register a complaint and choose whether to remain anonymous. Once a report was filed, it was emailed to the internal audit department who would then investigate.

While some participants at the TRP panel discussion expressed concern that implementing risk compliance and whistle-blower procedures would increase internal bureaucracy and disrupt business, Dyfan Owen, a partner at law firm Ashurst, said this would not be the case, according to the white paper.

Helping companies identify risks will ultimately give them a competitive advantage in jurisdictions such as the United Kingdom, and companies implementing these procedures often enjoy preferential consideration during tendering processes as well as easier access to finance, Owen said.

Click here to download and read a white paper outlining the issues debated at the TRP panel discussion.

Further reading:
• PwC Global Economic Crime and Fraud Survey 2018: A spotlight on the Middle East
• Cleaning up: Managing bribery, corruption and fraud risk in the Gulf's construction industry
• Corporate governance: Someone to watch over me
• International Internal Audit Conference in Dubai gets big support from the Gulf and major firms
• Dubai to deploy Artificial Intelligence to verify lease contracts
• EU suspects tax fraud at China's new gateway to Europe
• Fraud a concern following VAT introduction, says expert
• Managing bribery and corruption investigations in the UAE

(Writing by Shane McGinley; Editing by Michael Fahy)
(shane.mcginley@thomsonreuters.com)

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