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Fraud up 69 per cent for construction companies

The average construction company loss to fraud has increased by 69 per cent largely driven by the credit crunch and tough economic climate, according to the latest Kroll Global Fraud Report.

Companies lost an average of £7.92 million to fraud in the past three years, compared to last year’s figure which stood at £2.51 million. The figures are a result of a survey Kroll commissioned from the Economist Intelligence Unit of 890 senior executives worldwide.

The most common types of fraud in the construction industry are theft of physical assets or stock (32 per cent), financial mismanagement (31 per cent), management conflict of interest (29 per cent), corruption and bribery (28 per cent) and regulatory or compliance breach.

More than nine out of 10 construction companies surveyed have suffered from corporate fraud in the past three years, up from 77 per cent in last year’s survey.

Blake Coppotelli, senior managing director in Kroll’s Business Intelligence & Investigations division said: “The findings show that fraud is not only widespread but also growing in the construction industry and we expect to see this even increase further as conditions become tougher for business and the full impact of the credit crunch unfolds.

“Despite some success at reducing certain types of fraud the construction sector is vulnerable to an array of fraud and companies must address this more aggressively now to reduce their risk to and improve their business operations.”

The Kroll Global Fraud Report includes detailed industry analysis across a range of different fraud categories, sectors and regions. To obtain a copy please visit www.kroll.com/about/library/fraud/