Nearly 75 percent of economic crimes committed in the automotive industry are conducted by internal perpetrators, making it the industry with the highest rate of insider crimes, says a new report from PwC, which operates a large practice in downtown Detroit.
According to the 2014 Global Economic Crime Study, most internal perpetrators were either senior executives (23 percent) or middle managers (54 percent), and they’ve been keeping busy. In fact, 28 percent of automotive respondents reported that their companies experienced an incident of economic crime, up from 25 percent in 2011.
The most common types of crimes included asset misappropriation at 74 percent; procurement fraud and bribery/corruption, both at 34 percent; and human resources fraud and cybercrime, both at 13 percent.
But crime doesn’t pay, says Ted Hawkins, a partner at PwC. “Economic crime results in significant revenue lost as well as impacting employee morale.”
“As the automotive industry continues to do business on a global basis, it becomes even more important to implement a fraud risk management strategy to fight against these types of crimes,” Hawkins says. “When automotive companies invest in emerging markets, these types of crime-fighting tools can help to uncover so called kick-back schemes and unethical vendor selection.”
Even so, less than half of the automotive sector’s companies have conducted a fraud risk assessment at least annually over the past 24 months, and nearly 30 percent haven’t completed one at all, according to the study.