Four out of five companies worldwide have suffered from corporate fraud in the past three years, says a survey from the world''s leading risk consulting company Kroll, based on a poll of 900 senior executives worldwide, conducted on its behalf by Economist Intelligence Unit, the business information arm of The Economist Group, publisher of The Economist.

Kroll provides a broad range of investigative, intelligence, financial, security and technology services to help clients reduce risks, solve problems and capitalise on opportunities.

According to the report, 49 per cent of Indian respondents disclosed that corporate fraud was much more prevalent currently than three years ago. For China, this figure is 42 per cent. In both India and China, 60 per cent of those polled see themselves as being vulnerable to demands for bribes and corruption.

New technologies, new investors and expansion into new overseas markets have opened the door to different forms of fraud, the report concludes. In some sectors, more than a fifth of companies have lost more than $1 million. Seven per cent of Indian respondents said fraud has cost them between $100,000 and $1 million, while 39 per cent said it cost them below $100,000.

"As our society has become more reliant on information technology, increased globalisation and greater interconnectedness, certain exposures have expanded right along with them," according to Jules Kroll, founder of the company.

"Dramatically new exposures such as ID theft, various IT crimes, and false reporting by asset managers were rarely seen 25 years ago."

"The risks of fraud for businesses are greater today than in the past," said Anne H. Tiedemann, Regional Managing Director of Kroll Greater China and Southeast Asia. "Even the whiff of fraud may sometimes be sufficient to place a company under severe scrutiny or in financial distress."

The report reveals:
* Regional variations with intellectual property theft and counterfeiting are closely linked to countries rather than regions. Intellectual property theft was seen as the highest in China, with 38 per cent in China affected by IP theft in the last three years. This figure is 14 per cent for India, below the global average of 19 per cent

* Theft of physical assets or stock, which was experienced by 34 per cent of surveyed global respondents, is particularly widespread. In addition, a fifth of companies suffered from information theft, conflict of interest, financial mismanagement, internal financial fraud, procurement fraud, or corruption and bribery.

* The average cost due to fraud to large companies globally with annual revenues of more than $5 billion — was more than $20 million, with about 1 in 10 losing more than $100 million. More than a fifth of all companies in some sectors had lost more than $1 million - healthcare, pharmaceuticals and biotechnology; construction, engineering and infrastructure; and financial services

* Theft, loss of or attack on information are the biggest concerns to companies when asked how they assess their future risk, with 20 per cent of global respondents describing themselves as highly vulnerable. More than 30 per cent believe that IT complexity has increased their exposure to fraud

• High staff turnover is the most frequent cause of increased exposure to fraud, which is cited by 32 per cent of global respondents.
• Close behind are complex IT arrangements (31 per cent)
• Entry into new markets (28 per cent) and
• Increased collaboration between companies (26 per cent)

All these factors are closely tied with modern business practice. Entry into new markets is of particular concern for larger organisations.

The extent of corruption and bribery varies widely from one region to another. The proportion of companies that recently suffered from it in the Middle East and Africa (39 per cent) is by some distance the highest. But more than twice as many Eastern European respondents (29 per cent) have experienced the problem than those from Western Europe, (14 per cent), and more than three times as many from Latin America (29 per cent) as from North America (9 per cent).

Asia / India Findings

]Prevalence of Fraud

• 35 per cent of Asia respondents said that corporate fraud in Asia is much more prevalent now compared to 3 years ago.
• 49 per cent of India respondents said that corporate fraud is much more prevalent than compared to 3 years ago.

Cost of Fraud

• 7 per cent of India respondents said fraud has costed them between US$100,000 to $1 million, while 39 per cent said it cost them below $100,000.

Corruption and Bribery

• 24 per cent of the respondents in Asia have suffered from corruption and bribery in the last three years.
• 30 per cent of respondents in India have suffered from corruption and bribery in the last three years. In both India and China, 60 per cent see themselves as vulnerable to bribes and corruption (10 per cent in Japan).

IP Theft

• IP theft varies from region by region with the highest percentage of respondents in Asia Pacific. IP theft was seen as the highest threat in China (38 per cent) as compared to India (14 per cent).

Counter Measures

• Despite the perceived and real threat from fraud, emerging markets show the lowest adoption of counter measures.
• 52 per cent of Asia respondents don''t employ counter measures such as due diligence to combat fraud.
• 49 per cent in India respondents don''t employ counter measures such as due diligence to combat fraud (62 per cent in China).

Increased exposure to fraud

• Respondents as increasing the threat cited many factors, but staff turnover was amongst the highest. Concerns about this issue were highest in Asia-Pacific.
• 40 per cent of Asia respondents said that staff turnover has increased its company''s exposure to fraud.
• A second widely cited factor was weak internal controls. While the Middle East and Africa that saw the greatest risk (33 per cent), with Latin America just behind (25 per cent)., 25 per cent of Asia correspondents said weak internal controls increased their exposure to fraud.