Anti-crime measures as a response to corporate fraud

A global survey on fraud and economic crimes conducted by PwC[1] identified that half of the companies in Brazil and worldwide suffered some type of crime or were victims of frauds between 2016 and 2017.

The survey results also revealed that anti-fraud measures have gained prominence and are now an essential matter for business.

Despite the fact that investments in prevention and mitigation of fraud in corporate environments have grown in the last couple of years, as well as the fact that executives are more aware of the risks and are using technology as an ally to manage them, few companies are actually working to minimize the impacts of such fraudulent practices on their activities.

Fraud carried out by internal agents in the purchasing area, in the human resources sector, and in the accounting area are a reality for small, medium and large companies in Brazil.

Due to the great difficulties in repressing such practices, especially those related to clandestine embezzlement of payroll values and purchase of supplies, many companies choose to invest their resources for prevention in the technology area, forgetting that fraud is the product of a human action, based on a combination of conditions, motivations and opportunities.

In fact, experience shows that a large portion of corporate fraud associated with misuse of resources is committed by employees who know the company’s internal control and monitoring processes very well, thus exploiting their vulnerabilities.

Therefore, companies need to develop a more rigid hiring process in their strategic areas, in addition to strengthening risk assessment practices in the organizational culture.

On the other hand, the repression of fraud in the corporate environment cannot be reduced to carrying out internal investigations to ascertain the losses suffered, in order to justify the dismissal of the employee responsible for the criminal practice.

The inability to react adequately to fraud can pose a serious reputational risk to the organization, both internally and externally.

In addition, the consequences of criminal practices can be substantial and costly, holding responsible and penalizing managers, as well as creating insecurity in the work environment.

Criminal liability of the perpetrator is essential, both to demonstrate the company’s seriousness and severity in combating fraud, and to minimize the economic losses suffered by the organization.

Demarest’s pioneering and differentiated performance in supporting and representing companies that are victims of corporate fraud demonstrates that the actions that are taken, including: the launching of a police investigation, the adoption of patrimonial injunction measures to freeze values and to identify and constrict assets acquired through a criminal practice, and the monitoring of the investigation aiming at the employee’s criminal liability,  all in which shows significant results to our clients, from a preventive and enforcement perspective, as well as for compensation of damages.

1 Taking fraud out of the shadows – Global Survey on Economic Fraud and Crime 2018 – pwc