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. Last Updated: 07/27/2016

PwC Says Employee Thieving is on the Rise

Company employees in Russia are now stealing more from their companies than they did two years ago, contributing to a quadrupled cost of $12.8 million per company -- more than five times the global average, PricewaterhouseCoopers said Wednesday.

In 2007, company insiders were responsible for 38 percent of economic crimes, up from 13 percent two years ago, said the auditor, citing a biennial survey of 5,400 companies, including 125 leading companies in Russia.

"An alarming finding" was that senior managers at firms in Russia were responsible for 41 percent of economic crimes -- more than twice the proportion two years ago -- according to the global study, which was conducted jointly with Germany's Martin-Luther University in Halle-Wittenburg.

The direct cost of economic crime in the country has more than quadrupled to $12.8 million per company -- five times higher than the global average of $2.4 million. Of the companies surveyed, 63 percent had losses from fraud of more than $1 million and 20 percent of the companies lost more than $10 million, PwC said.

Asset misappropriation is considered the most common type of fraud (43 percent), followed by corruption and bribery. Overall, 59 percent of the companies surveyed in Russia said they were subject to one or more significant economic crimes in the past two years. This is a 10 percent increase from 2005 and above the global and Central European averages of 43 percent and 50 percent, respectively.

Most of the company employees, customers and business partners steal due to greed (73 percent), because they had a low temptation threshold (30 percent) or did not realize they were doing something wrong (33 percent). A low level of commitment to the company was responsible for 21 percent of the cases, the study said.

On the bright side, PwC said the majority of such crimes were initially detected by corporate and internal audit functions.

"Although the headline figures for economic crime have increased in Russia, I believe that there are positive factors underlying these statistics," said Roger Stanley, head of Central and Eastern Europe forensic services at PwC, citing as examples an increasing desire for transparency and lower stigma attached to reporting fraud.

A spokesman for the Interior Ministry's economic crime department, Yury Sinyutin, said he heard of the survey but declined to immediately comment on it.

A spokeswoman for PwC was not immediately available for additional comments Wednesday.