Firms fear reporting fraud

WELLINGTON: Many businesses do not report financial crime because of the risk to their reputations, the head of the Serious Fraud Office says.

SFO chief executive and director Julie Read appeared before a parliamentary select committee yesterday alongside the office’s responsible minister Paula Bennett.

In response to a question about why white collar crime was not increasing, Ms Read said it was difficult to know the true size of the problem.

‘‘What we see is what is referred to us or what is detected.

‘‘We know there is a level of financial crime out there that is undetected.

‘‘One of the accounting firm’s surveys showed that something like 40% to 60% of businesses reported they had been the subject of financial crime in the last three or four years.

‘‘A lot of that is not reported because people don’t want to admit their firms have been the subject of financial crime.’’

Ms Read said companies were less likely to report financial crime in times of economic growth, given it often did not greatly affect their bottom line.

‘‘But when you have a recession, then all of a sudden it . . . puts them out of business and this all comes to light.’’

Budget 2017 allocated the SFO an extra $1.4 million in operating funding and $840,000 in capital over four years, for an integrated case and evidence management system.