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Economic crime on the rise

There are many ways of cooking the books.

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An international study has found that the number of Swiss companies reporting fraud in the past two years has increased from 24 to 37 per cent.

According to the PricewaterhouseCoopers (PwC) Global Economic Crime Survey, Swiss executives were more than twice as likely to be involved in crime as their counterparts abroad.

Even though financial wrongdoing is increasing in Switzerland, the Swiss average is still below the worldwide figure of 45 per cent, said the auditing firm on Tuesday.

PwC found that worldwide since 2003 there has been a 71 per cent increase in the number of companies reporting cases of corruption and bribery, a 133 per cent rise in the number reporting money laundering and a slightly higher growth in the number reporting financial misrepresentation.

Companies around the world reported suffering eight fraud incidents a year on average. In Switzerland, the average was five. Nevertheless, Rolf Schatzmann, from PwC Switzerland, told swissinfo that Swiss companies were far from clean.

"We have a culture of confidence in Switzerland and there is a general belief inside the country that the Swiss do not commit fraud," Schatzmann said. "But the reality shows a different picture, so this may be the wrong attitude to have."

Managers

Cause for alarm was the finding that top managers are responsible for more than half of employee fraud in Switzerland – 53 per cent compared to 24 per cent globally.

Swiss companies said they had undertaken no action whatsoever in 19 per cent of all cases of economic crime, but the number rose to 40 per cent if top management was involved.

"It would be wrong to adopt a culture of mistrust, but perhaps Swiss companies should take a closer look at certain things and take more measures against fraud to find the right balance between trust and safeguarding company interests," Schatzmann added.

The cost to Swiss firms was estimated at SFr2.76 million ($2.1 million) – higher than the global average.

The Swiss retail and consumer sector was worst hit, with 59 per cent of companies reporting fraud, pushing the financial sector (48 per cent) to second spot due to tougher regulation.

Complacency

In its report, PwC warned that "companies may have a false sense of security when it comes to fraud".

Indeed, two-thirds of Swiss companies said they did not think they would be victims in the next five years, compared to 21 per cent worldwide.

"There appears to be a tendency to think that fraud has been talked about and addressed and that it will now disappear," PwC's John Wilkinson told swissinfo.

"If this is their viewpoint, there is a real danger of complacency and that fraud will continue to proliferate in future."

swissinfo with agencies

Key facts

37% of Swiss companies surveyed this year reported fraud - up from 24% in 2003.
The rate was 42% in western Europe and 45% worldwide.
66% of Swiss companies did not think they would be victims of fraud in the next five years, compared to 21% worldwide.
53% of fraud in Swiss companies was committed by executives.
PricewaterhouseCoopers surveyed 3,634 companies, including 125 in Switzerland, in 34 countries.

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