Long-Serving Male Employees Most Likely To Commit Fraud in UK

April 29, 2004 (PLANSPONSOR.com) - Corporate fraud in the United Kingdom is most likely to be committed by long-serving male executives.

More than seven out of 10 (72%) cases of corporate fraud examined over the past two years were committed by male employees only, compared with female-only fraudsters being identified in 7% of cases and both male and females involved together in some 13% of cases.   Of the perpetrators, 32% had been working for their firms anywhere form 10 to 25 years, according to a news release issued by KPMG’s UK Forensics division.   

By department, finance is the most likely business area that the fraudster targeted or was responsible for (40% of cases). Procurement was the next most likely area (12.5%), while one in ten frauds occurred in the sales area.

“One of the alarming findings from the study was the seniority of the perpetrators – we found that directors or senior managers committed almost two thirds of the 100 cases surveyed,” according to Alex Plavsic, the UK national head of fraud investigations at KPMG.  

Breaking down the cases even further, KPMG found the age of the principal fraudster to fall in the 26 to 45 year old range 41% of the time, while 29% of cases involved those between 46 and 55. Those between 18 and 25 made up only 1% of perpetrators.

KPMG found the primary reason corporate fraud was committed in the UK was a weak corporate control environment.   In other instances, the perpetrator abused key authorities (33%) and just over one in 10 frauds were achieved by the fraudster operating in alliance with others to circumvent controls.

Once nabbed, dismissal of the perpetrator was the most common response:   more than half (55%) of the fraudsters were fired.   Interestingly though, in just under one in five cases no sanction was taken, which KPMG attributes to concerns about the reputational impact of fraud becoming known

“This study has highlighted some worrying findings, and particularly demonstrates the need for companies to continually review their internal controls. Regular testing of key controls against the risk of fraud will identify any weaknesses in the system, which could easily be exploited by potential fraudsters,” added Plavsic.