Ernst & Young holds a Seminar on Fraud, Bribery and Corruption in the Middle East

Kuwait City 19 December 2012: Ernst & Young organized a seminar on Fraud, Bribery and Corruption at Sheraton Four Points. The event was attended  by over 100 professionals from both the public and private sectors.

Bob Chandler and Michael Adlem, Partners at Ernst & Young’s MENA Fraud Investigation & Dispute Services (FIDS) practice, presented the results of an independent survey commissioned by Ernst & Young on Fraud, Bribery, and Corruption in the Middle East. A comparison was also made with the results of Ernst & Young’s Global Fraud Survey to highlight major differences.

Waleed Al Osaimi, Office Managing Partner, Ernst & Young Kuwait, commented on the extent of fraud, bribery and corruption and the losses associated with them, which are hugely underestimated. He added: “It is difficult for employers to control or influence individuals’ financial motivations for committing fraud. However, company policies and procedures can be changed to control factors that lead to fraud such as ease of opportunity and employee dissatisfaction. While it may be difficult to completely eradicate fraud, there are definitely ways of curbing its extent.”

As Middle East economies have developed and become increasingly sophisticated, so too have the methods of committing fraud in the region. Despite high profile efforts to combat fraud, bribery and corruption, they remain common in the Middle East.

Michael Adlem said: “Too often, organizations in the Middle East confront fraud only after the event has already taken place and lack adequately robust controls to prevent it occurring. As a result, losses are often significant and reputational damage immense. When fraud is detected, companies in the Middle East often prefer to deal with it internally, for fear of losing face.”

Saqib Nisar, Director, FIDS, Ernst & Young Kuwait, said: “In the past, family-owned companies in the Middle East may have believed foreign legislation such as the US Foreign Corrupt Practices Act and the UK Bribery Act had no impact on them, but these companies now want to enter into partnerships with international organizations and must fill in detailed corporate governance documents. Due to globalization, companies in Middle East can no longer ignore what is happening in other regions.”

Bob Chandler commented on how Saudi Arabia has proved to be proactive in combating corruption. He added: “Some of the larger Saudi companies are taking corruption and fraud issues very seriously. These companies are in a strong position to demand that their suppliers have bribery and fraud prevention systems in place. Their financial clout gives them the power to enforce these systems.”

According to the survey, 52% of respondents said the company for which they worked did not have a relevant anti-fraud strategy and 35% said their company had no policy in place for reporting bribery or other forms of corruption. Where corporate policies were in place, many respondents said they were lacking in detail and completeness. Many respondents said corporate risk assessment procedures were inadequate and often not conducted at all.