Wednesday, 24 June 2009

Government stimulus money vulnerable to fraudsters

Governments have ploughed billions of dollars into stimulus packages to breathe new life into flagging economies, however, they could be handing fraudsters an "unintentional" meal ticket, according to the latest Kroll Global Fraud Report.

Of the $5 trillion in stimulus funding various governments have doled out, Kroll estimates that as much as $500 billion could be lost to fraudsters as the investment amount and the highly complex procurement processes involved mean these kinds of "big-budget capital projects" are often targets for corruption. 

"The unprecedented amount of financial support that governments have pledged to help stabilise their economies leaves the door wide open to fraudsters," said Richard Abbey, managing director, Kroll's Financial Investigations practice. "It’s a once-in-a-generation opportunity for those engaging in corrupt practices to cut themselves a large slice of the pie and it’s important that governments and businesses alike are aware of the risk and are prepared to counteract them.”
Kroll says focusing on the "middlemen" who are entrusted with large sums of money is essential if this type of crime is to be prevented. That means procurement processes need to be highly transparent. Resources must also be made available to "root out" corruption and Kroll advises that salaries should be appropriate to discourage employees from committing fraud. 

So can we be sure that government stimulus and taxpayers' money has ended up in the right hands? And will the processes around how this money is assigned and spent be transparent to the public?

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