‘Titanic Falls for Tip of Iceberg’ As Official Says NZ Fraud Report Misses Real Scale
KPMG’s fraud report released this year does not reflect the real magnitude of how much financial crime has been committed in New Zealand companies though it has sparked debates over the matter, according to head of Serious Fraud Office (SFO) Adam Feeley.
The fraud report drawn from a study conducted by KPMG from 2008 to 2010 showed more than $172 million increase in the cost of investment losses last year, far higher than the value recorded in the preceding two years. However optimism boosts confidence among investors as Deloitte reports no indication of financial fraud this year.
Meanwhile, Feeley emphasized his claim that the findings of the fraud report only indicates a “scratching in the surface of financial crime” as it misses the true level of fraud in New Zealand for the last couple of years.
In 2010, over $100,000 of the total cost of fraud could be attributed to 56 convicted cases, excluding the unaccounted for, a value which is $74 million higher than in 2009.
According to KPMG, the rise in the record of fraud report owes to newly convicted financial fraud committed by large firms such as Five Star Finance, with its director Neill Williams.
But Feeley cited another fraud report in Britain which concluded a £ 38 billion total loss of investors from financial crime, suggesting the figure mocks at the record in New Zealand.
He said the real scale of fraud in New Zealand could possibly reach the same level as in Britain if there is an established proportion between the studies conducted in both countries.
Feeley went on to advise authorities to look for ways to prevent similar instances of financial fraud from happening in the future rather than keep spending money to bust fraudsters.
On the other hand, KPMG explained that its fraud report merely indicates a continuing trend in past crimes instead of what Feeley claims to be an upsurge of the costs in financial fraud over the years.
According to the global consultancy firm, the fraud report does not necessarily reflect a trend of higher scale of fraud to be seen in the years to come.
Nonetheless, KPMG forensics chief Stephen Bell admits it is difficult to measure how much the fraud in New Zealand costs, adding that companies believed two-thirds of the overall frauds in the country remain unaccounted for.
He said there is possibility that the real cost of fraud could run billions of dollars a year, in contrast to the fraud report of his firm.