Canada: a nation of fraudsters??? – As Canadians, we have become all too aware of the moral failings of those in positions of trust in the U.S. or other parts of the world.  But 2009 provided a series of reminders that mega-fraud is also present within our borders:

• Montreal financial advisor Earl Jones stands accused of spending and losing over $75 million of client funds entrusted to him.
• an Alberta duo (Milowe Allen Brost and accomplice Gary Allen Sorenson) are suspected of embezzling approx. $100 million from clients.
• in recent weeks, Toronto police have been seeking Weizhen Tang; Tang a Toronto money-manager who dubs himself “the Chinese Warren Buffet”, is alleged to have escaped to Hong Kong after creating a $30 million Ponzi scheme in this country.

But it would be naïve to conclude that these are isolated examples.  A recent study by PricewaterhouseCoopers reports that Canada has witnessed significant deterioration in the moral standing of some of those in corporate Canada; 56% of corporations surveyed had been victimized by economic crime in the prior 12 months.

And Canada is witnessing the increase in fraud activity at the same time that reported fraud occurrences appear to be declining globally.

To put Canada’s fraud problem in context, the report indicates only Russia, South Africa and Kenya reported a higher percentage of companies reporting fraud in the past year.  “From an economic crime perspective the worst may be on the horizon.”

An increased incentive to commit fraud exists during a period of economic downturn.  Ironically, the survey recognizes that opportunities to con the public or other entities may now be greatest – detection, prevention and investigation systems have been scaled back due to reduced financial resources.

At a time when growth and efficiency are obligatory for the Canadian economy, this problem will impact many Canadian corporations with increased insurance premiums (or with inability to insure risk), reduced efficiency and competitiveness, and declining employee morale.

What a reputation!  And at what a cost.

* Economic Crime in a Downturn – the 2009 Global Economic Crime Survey: The Canadian Perspective (PricewaterhouseCoopers)

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