Study: over 75% of Romanian companies are defrauded by their own employees
Over 75% of companies in Romania are defrauded by their own employees, with periods of crisis amplifying the phenomenon of occupational fraud, according to an analysis by Corporate Intelligence Agency, a risk management company dedicated to the business environment.
"2020 came with movement restrictions and wage cuts. Some employees realized that they needed to resize their expenses relative to the salary left after the cuts. Another part looked for alternative solutions to <> losses and even increase revenues.
Organized crime has turned for funding to companies with big budgets and low fraud detection capabilities, such as retail, insurance, banking, logistics, etc. The share is increasing, especially in a crisis. We saw this in 2008-2009, but especially in 2020 in the context of the economic crisis caused by the COVID - 19 pandemic", says Gabriel Zgunea, CEO Corporate Intelligence Agency.
Internationally, companies, government institutions and not-for-profit associations lose 5% of revenue annually, on average, due to fraud committed by their own employees, managers and even shareholders, according to a report on occupational fraud and abuse by the Association of Certified Fraud Examiners (ACFE).
"We believe that the percentage is higher in Romania, where corporate intelligence services, which can significantly reduce losses and occupational fraud, are being used far below their potential. Also, very few companies in Romania have in place anti-fraud mechanisms or solutions to deal effectively with suspected fraud or breaches of internal operating regulations," says Gabriel Zgunea, adding that in Romania, compared to other parts of Europe, fraud is seen as an inherent business risk, and managers believe they should accept this.
But financial losses are not the only consequences of internal fraud. Companies suffer massive reputational damage as a result, which can lead to a loss of credibility and trust in the market.
Moreover, in some cases, internal fraud can lead to criminal investigations against companies and criminal liability.
The most common types of fraud concern various conflict of interest schemes - probably one of the most common fraud schemes in Central and Eastern Europe: employees determining or influencing the allocation of contracts to companies founded or controlled by them or their relatives (a common typology in every industry); preferential treatment or allocation of contracts given to certain business partners - usually observed in the pharmaceutical industry, retail and real estate developers; manipulation of insurance policies, especially through illicit arrangements between anti-fraud department employees and customers; manipulation of bank loans; compromising email with inside help; misappropriation or theft of assets (unauthorized use of company cars, laptops, machinery of any kind), also very commonly observed in every industry.
Although lagging behind companies in Western Europe, companies in Romania are becoming increasingly interested in improving their risk management and compliance systems, as they face a growing number of internal frauds or potential internal frauds that risk jeopardizing their reputation and assets.
The companies that generate the most applications are in the retail, investment, banking, manufacturing, pharmaceutical, IT, oil & gas, construction, logistics, insurance, telecom, management, industrial services, telecommunications, management, etc.
