Tuesday, 24 November 2009

Fraud central

Russia has the highest level of fraud anywhere in the world - according to a recent survey by PricewaterhouseCoopers.
Some 71 per cent of respondents said they had been fraud victims in the last 12 months alone, a "shocking" 12 per cent rise from the company's last survey in 2007.
The instances of economic crime have shot up during the crisis, which has caused cash flows to dry up; more than half the people surveyed said their organisation was more at risk in the current economic situation than previously.
The significant increase in this type of fraud may result from failures in controls arising from budget cuts," PwC said in their report.
Transparency International was only slightly less scathing on Russia's corruption record, placing the country 146 out of 180 - on a par with Sierra Leone.
The release of both reports within days of each other delivered a graphic reminder that investing in Russia remains a risk.
"[The reports] made for grim reading, and highlights just how much work Russia needs to do to improve its investment image," UralSib's chief strategist Chris Weafer said in a research note.
Russia scored a measly 2.1 out of 10 and, according to the organization, corruption is destroying the country's economic potential.
"We cannot move forward," Transparency International said in a statement. "Corruption, if it remains as it is now, will continue to devour those resources we could invest in our future."
In his state of the nation address earlier this month and in an article in Novaya Gazeta, President Dmitry Medvedev outlined proposals to tackle the problem of corruption.
However, Transparency International branded the enforcement of Russia's current laws inadequate to deal with the problem.
"The quality of the application of the new Russian anticorruption legislation leaves much to be desired," the organisation said, adding; "Even the best laws, without daily strict and effective application, in practice will not change anything."
Misappropriation of assets remains the most prevalent form of economic crime in Russia, with 48 per cent of the PwC respondents saying they had been affected by it in the last year.
The reports are likely to put off potential investors in Russia and could prove damaging to an economy hoping for a kick-start from foreign investment.
"This is clearly an issue that can't be overlooked by any organisation doing business, or planning to do business, in Russia," .

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