Average building firm's loss to fraud rose 69% last year, says new report
Millions of dollars have been lost because of a dramatic rise in construction fraud triggered by the credit crunch, according to a report released today.
The latest Kroll Global Fraud report found that the average construction company's loss to fraud has increased by 69%, driven largely by tough economic conditions. In the past three years, companies lost an average of US$14.2m (£7.9m), compared with US$4.5m (£2.5m) last year.
A total of 890 senior executives participated in the worldwide survey, which covered 10 industries, with just over one-quarter based in Europe. More than 95% of the construction companies surveyed said they had suffered from corporate fraud in the past three years - up by 77% from last year's survey.
Blake Coppotelli, senior managing director in Kroll's business intelligence and investigations division, said: “The findings show that fraud is not only widespread but also growing in the construction industry, and we expect to see this increase even further as conditions become tougher for business and the full impact of the credit crunch unfolds.”
Most frequent types of fraud occurring in the construction industry include theft of physical assets or stock, financial mismanagement, management conflict of interest, and corruption and bribery.
“The construction sector is vulnerable to an array of fraud, and companies must address this more aggressively now,” added Coppotelli.