x Abu Dhabi, UAETuesday 23 January 2018

Companies say fraud has worsened in the Middle East

The Kroll Global Fraud report shows that fraud may be worsening in some areas of the Gulf as a result of the financial crisis.

ABU DHABI // Fraud in the Middle East has been revealed to a greater extent by the financial crisis, but it may be increasing as employees try to conceal losses, according to a new report.

The Kroll Global Fraud report found that 86 per cent of respondents in the Middle East said their companies were affected by fraud and that 40 per cent of them said it had grown worse in the last year.

Tom Everett-Heath, the managing director of Kroll’s Middle East office, said the region was largely in line with the rest of the world but that there were greater efforts to make fraud investigations public.

“The downturn has both revealed fraud and induced it,” Mr Everett-Heath said. “There are more frauds that we are now aware of because of increased scrutiny in the government and regional corporations, but some new frauds have been triggered by the economic downturn.”

Businessmen were under greater pressure, he said, to conceal the risky deals they conducted during the period when asset prices were rising rapidly.

“During the boom, positions were being taken on a speculative basis in an unstructured way,” he said. “The downturn in the market creates fraud because they need to cover up those transactions that have gone wrong.”

The region has recently seen the opening of some of the biggest fraud cases in its history. The Saad-Al Gosaibi saga and the improper withdrawals of more than Dh600 million from Damas Investments are two examples of recent cases that are playing out in the region.