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The Warsaw Voice » Business » January 7, 2009
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Corporate Fraud on the Rise
January 7, 2009   
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Roughly half of Poland's businesses have suffered from fraudulent practices on the part of their employees in recent years, with top-level managers responsible for the greatest damage to corporate finances, according to a survey conducted by international credit insurer Euler Hermes.

The research was conducted in November 2008 on a sample of 200 or so employers in Poland. It shows that corporate fraud most often takes place in sales and procurement departments, which were mentioned by 45 and 23 percent of those surveyed respectively.

Theft is the most frequent form of corporate fraud, mentioned by 45 percent of those surveyed. Ninety percent of business owners say they have lost less than zl.100,000 as a result of embezzlement and other fraudulent practices.

It is impossible to estimate the total amount of losses Polish companies sustain every year as a result of fraud, Euler Hermes says. In Germany, around 50 percent of companies use what are called fidelity products to insure themselves against fraud. In the past five years, Euler Hermes has paid out over 180 million euros to German companies in compensation for fraud.

"Fraudulent practices on the part of employees are a major problem for businesses, a problem against which there was no effective protection in Poland until recently," says Krzysztof Chechłacz, vice-president of Towarzystwo Ubezpieczeń Euler Hermes SA, an insurer that has introduced comprehensive insurance against fraud in this country. "Meanwhile, in most European countries companies insure themselves against the risk of losses resulting from fraud, being aware of the scope of the problem. Equally important is the need to introduce monitoring mechanisms in companies and increase public awareness of what corporate fraud is. The case of Enron is the most evident example of corporate fraud. Numerous fraudulent acts committed by the top managers led to the company's collapse and a long-term process aimed to rebuild confidence in the American capital market."

Euler Hermes' research on the German market shows that the construction and hotel sectors are the most vulnerable to the risk of fraud. Retail, transportation and logistics come next. Employees aged between 26 and 40 and working in accounting and inventory departments are most likely to commit fraudulent acts, according to the study. Top-level managers are another group prone to fraud.
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