Corporate crime costing €2.5bn

Corporate crime is costing businesses an estimated €2.5 billion a year, according to a Chamber of Commerce-backed survey published yesterday.

Research carried out by consultants RSM Robson Rhodes and Dublin Chamber of Commerce finds that Irish companies are losing €2.5 billion a year through fraud, embezzlement, and cheque and credit card fraud.

The consultants calculate that, of the €2.5 billion, €2 billion is the total estimated cost of the offences themselves, while the bill for prevention comes to €500 million.

Launching the report, Mr Patrick D'Arcy of RSM Robson Rhodes calculated that, on average, annual losses per company surveyed came to €450,000, while prevention cost each one a further €114,000.

The figures are estimates, extrapolated from the damage suffered to businesses as a result of reported crime. Mr D'Arcy said that a high proportion of these offences went unreported.

The survey found that only 51 per cent of Irish companies discussed the issue at board meetings more than once a year.

"The reason they are not reporting it is because they are more concerned with the impact on equity shareholders, suppliers and customers," Mr D'Arcy said.

The report shows that eight out of 10 respondents are concerned about the effect that reporting financial fraud could have on supplier relationships, three-quarters were worried about the impact on both shareholders and brand image.

Mr D'Arcy explained that this prevented them from discussing the issue with other businesses and sharing information, which is a recognised way of controlling the problem in Britain.

Because of the low level of reporting, the survey was not able to calculate how widespread the problem might be.

"The €2 billion cost to business could be just the tip of the iceberg," Mr D'Arcy said.

However, 34 per cent of the businesses surveyed said that they had taken disciplinary action against employees who had committed offences, while 44 per cent of them believed that the problem would get worse over the next three years.

Gina Quinn, chief executive of Dublin Chamber of Commerce, said that the problem ranked as a substantial cost to business.

"Firms see the cost of crime directly, for example, in terms of goods that are stolen but also indirectly, through increased security and higher insurance costs."

Minister for Justice Michael McDowell warned that the "fiction that white-collar crime is a victimless crime must be overcome. The negative affects of economic crime are actually suffered by everyone in the State."