Swiss courts heard 59 cases of white-collar crime last year involving a total loss of CHF 426 million. These crimes were mostly committed by somebody from within the company’s own organization who acted alone for their own financial gain in order to finance a lavish lifestyle or repay debt. That is one of the many insights revealed by the current edition of the KPMG Forensic Fraud Barometer.
Last year, 59 cases of white-collar crime in Switzerland were responsible for losses of CHF 426 million. While the total value of losses declined considerably compared to the previous year, from CHF 1.4 billion to CHF 426 million, the all-time high in 2016 was mainly attributable to one case involving a CHF 800 million loss and three cases with losses of over CHF 125 million each. Measured against the long-term mean of CHF 512 million, the losses sustained in 2017 were slightly below average.
Professional and simple fraud as well as embezzlement were the most frequent white-collar crimes reported in 2017. The perpetrators were often motivated by their desire to finance a lavish lifestyle or to pay off debt. As in past years, private investors represented the hardest-hit group of victims and sustained total losses of around CHF 162 million, or an average loss of CHF 20.2 million per case.
By virtue of the special position they enjoy in the company, executives still pose the greatest threat. The analysis reveals that management level staff were responsible for total losses of CHF 120.9 million in 2017, the highest loss amount caused by any single group of perpetrators. While employees caused losses totaling CHF 117.4 million, if one individual case involving a loss of CHF 100 million is disregarded, the losses in the remaining cases came to a total of CHF 17.4 million or an average loss of CHF 1.7 million per case. By comparison, the average loss sustained in cases involving members of management was CHF 11 million. It became apparent in 2017 again that the consequences of acts involving collusion between members of management and employees are particularly serious: Here, the average loss in the three cases reported came to CHF 25.3 million.
A former asset manager at a bank speculated on the job and lost, then misappropriated his clients’ assets to cover up the resulting book losses. The financial damage came to around CHF 100 million.
In another case, the fraudster used a pyramid-type scheme to promise investors high returns on their invested capital. A portion of these funds was invested, yet the bulk of it landed in the fraudsters’ own pockets. The loss in this case came to CHF 73 million.
The KPMG Forensic Fraud Barometer covers all court cases tried in public and reported in the media over the course of the year. It does not include any crimes that have been reported to the police yet which never resulted in a conviction. Experience has also shown that the vast majority of these crimes are never even reported. “Because many companies are afraid of the damage this kind of news could cause to their reputation should the incidents become public,” says Matthias Kiener, Head of Forensic at KPMG Switzerland, as he sums up the situation. “Another key factor is the enormous effort required to trace cyber crimes back to their perpetrator,” adds Nico van der Beken, Head of Forensic Technology at KPMG Switzerland.
The KPMG Forensic Fraud Barometer is based on cases of white-collar crime that were tried by a Swiss criminal court during the year under review in which losses amounted to at least CHF 50,000 and which were reported in Switzerland’s main daily and weekly newspapers.
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