Bangalore: Call it white-collar crime or insider fraud. With rising business volumes and increasing cash flows, Indian companies are becoming vulnerable to frauds committed by employees.

Those less impacted are industries in chemicals, pharmaceuticals, and biotechnology sectors while almost all other industry verticals have reported instances of fraud.

According to a KPMG survey released here, greed and opportunity together accounted for 73 per cent of profiles of fraudsters. About 86 per cent of fraudsters held management positions and 60 per cent of them were at the senior management level or on the boards of directors.

The majority (39 per cent) were in the 36 to 45 age group and 31 per cent were aged 46 to 55. Only 3 per cent were in the 18 to 25 age bracket at entry level positions. Eighty five per cent of perpetrators were men.

The survey analysed profiles of 360 cases of fraud committed in Europe, West Asia, India and Africa and in terms of losses suffered by companies the Euro (equivalent to Rs 58) was taken as the common monetary factor.

The financial loss to a company from fraud in India averaged equivalent of Euro 50,000 and in 15 per cent of cases, more than Euro 10 million. The more common types of frauds in India involved embezzlement, false financial reporting, theft of cash or other assets,and plain corruption.

KPMG analysts pointed out that if a profile of "the typical fraudster" was constructed, 89 per cent committed fraudulent acts against their own employers and in 20 per cent of instances, external perpetrator was involved.

The tenure of employment had no positive influence; more than 50 per cent of offenders had been with their companies for more than six years. "Lone operators represent the greatest white collar crime risk for companies. Two-thirds of primary internal fraudsters are members of the top management. This highlights a significant risk, based on the concept of trust, as senior company executives are privy to confidential information and have the potential to cause most harm to their organisations," according to the analysts. Why do employees commit fraud? An opportunity was usually presented through weaknesses in internal controls. The motive often developed from financial pressure from a fraudster's extravagant lifestyle, the gap between remuneration earned and the responsibility held by the individual and basic greed.

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