Fraud cost $280m in six months
Friday 13 Apr 2012 5:39 a.m.
By Susie Nordqvist
Fraud has reached record levels in this country according to the latest figures.
The global credit crunch has been blamed for a rise in white collar crime around the world.
Data from accounting firm KPMG has revealed a massive spike in fraud being brought before New Zealand courts and experts say it is only going to get worse.
Serious Fraud Office general manager fraud and corruption Nick Paterson says the fraudsters are everyday people.
“They are one of the crowd. They just appear to be normal. They are a nice person, hard worker potentially. They have been put in a position, put under pressure, recognised an opportunity to make some money for themselves.”
For Christchurch businessman Gavin Bennett his love of the high life also proved to be his downfall.
Bennett was the director of it company Datasouth Group when he swindled $34 million dollars from South Canterbury Finance. He will be sentenced next month.
KPMG forensic partner Stephen Bell says Bennett liked spending.
"He spent quite a lot of money on female companions and luxury apartments and travel to New York, Hong Kong, Paris and fine clothes."
The case is one of 24 highlighted in a KPMG report detailing the massive rise in fraud in this country.
Almost $280 million dollars was defrauded in the last six months of last year, which is three times more than for the previous six months.
Men were responsible in 71 per cent of the cases with many of them in positions of trust.
Much of the fraud was against financial institutions.
Mr Bell says the figures will soon look even worse.
“South Canterbury Finance has charges laid against it for $1.5 billion so that will significantly drive the number up.”
The increase in fraud can be explained in part by better detection by companies.
"I think what we are seeing in the past we haven't looked hard enough," Mr Bell says.
But whatever the causes it is the effect that is important for investor Ross Fountain who lost $160,000 in finance company collapses.
“It really angers me that these directors and people in the finance industry have been so obsessed with their own greed and lack of integrity that they have run roughshod over investors.
"Many of these directors have put their money into trusts where the law can't get at it…That in itself is criminal.”
Mr Fountain says the lesson for investors is that if the investment and returns look too good to be true, they probably are.