As companies move towards greater financial transparency after the global recession, fraud investigations have doubled in the UAE in the past year says one top firm.
Investigations of corporate fraud double for top firm
A top accountancy firm's corporate fraud investigations across the country have doubled in the past year as more companies seek to uncover the financial misdeeds of the boom years.
Contractors trying to bribe developers to win building projects and bankers giving bad investment advice were common examples of alleged fraud, said Tareq Haddad, a partner of risk services at PricewaterhouseCoopers.
However, it was only now that such bad practices were coming to light after investigation.
"The downturn prompted more focus on fraud within all sectors," said Mr Haddad.
The Government has already moved to root out fraud and bribery with tighter laws and prosecutions of high-profile senior executives and officials.
Governments around the world are taking steps to weed out fraud. Now, it seems the private sector is taking similar action to scrutinise costs. Property and other deals done without shareholder approval were uncovered at the Dubai jewellery retailer Damas International. Mr Haddad, whose company was hired by Damas to investigate the deals, said PwC was also working on investigations of a similar nature.
Property, financial services and health care were among the sectors most exposed, he said.
"The nature of the property industry makes it more susceptible to fraud than other industries," he said. "You have big projects, there can be some subjectivity about how projects are executed and in many cases inconsistent levels of control about projects."
So-called "kickbacks", in which contractors offered cash bribes to developers to win projects, and the delivery of inferior projects were typical instances of fraud, said Mr Haddad.
A greater focus on closer control of costs and projects during the downturn had exposed more cases of corruption.
PwC has advised judges at Abu Dhabi courts on a criminal and a civil case involving construction firms. It signed an advisory agreement with the Abu Dhabi Judicial Department in June.
Increased pressure from shareholders of investment banks to examine poor financial performance related to the downturn also led to the discovery of fraudulent transactions, often from before the crisis.
Foreign investors also view economies with strong anti-corruption legislation more favourably.
"In general, there are more cases coming up and there is more political will to investigate," said Omnia Hussein, a member of Transparency International's secretariat in the MENA region. "At the same time, there is a sense that not enough is happening."