One of the world's top fraud investigators says there has been a big increase in the detection of fraud cases worldwide because of the global economic meltdown.
Forensic accountant Chris Cass, from global accounting firm Deloitte, has worked on cases including the collapse of the Bank of Credit and Commerce International, Barings Bank and local insurer HIH.
Mr Cass says companies are taking a closer look at their accounts and discovering serious financial crimes.
"I'm certainly beginning to see an almost ... exponential increase in the identification," he said.
"Without going into names, I think its fair to say that all the regulators and law enforcement agencies are extremely busy and getting busier."
On Thursday, disgraced US financier and Wall Street veteran, Bernard Madoff, pleaded guilty to what US prosecutors say is an "unprecedented fraud".
He told the court he was "deeply ashamed and sorry" for defrauding individual investors, charities, trusts, pensions and hedge funds.
The charges include fraud, perjury and money laundering.
Madoff was sent to jail to await sentencing in June. Investigators believe he swindled around $100 billion of investors' money.
Mr Cass says its the worst case of financial crime he has seen.
"I think the Madoff case is almost beyond belief. I've had alot of experience investigating Ponzi schemes where there is really no genuine commercial activity," he said.
Financial crimes include fraud, falsifying company accounts, intellectual property theft and employee theft.
Mr Cass says some of the criminals are those closest to the money including senior executives like chief financial officers.
"More recently we've seen a number of senior executives just completely override the controls and perpetrate significant frauds to either fund a gaming addiction or simply to maintain a lifestyle."
The Australian Securities and Investments Commission (ASIC) is investigating the collapse of companies including childcare provider ABC Learning, Allco Finance Group and investment firm Storm Financial.
The corporate regulator is often accused of being a toothless tiger.
Professor Ian Ramsay, the director of the Centre for Corporate Law and Securities Regulation at Melbourne University, says an insufficient budget is the real problem.
"Something like 154 investigations were commenced during the last financial year," he said.
"So that gives us a clear indication into the significant restraints that our regulators operate under.
"They have limited personel, they have limited dollars, and inevitably they must choose - they must make some difficult decisions about which complaints they actually investigate."
ASIC will receive $300 million in federal funds this financial year.
It says the number of attempts to manipulate the sharemarket doubled in 2008.
The corporate regulator received 67 referrals for potential breaches of market rules but there are yet to be any prosecutions.
Chris Cass says Australia's corporate law is adequate but the problem is enforcement both inside and outside the boardroom.
He says senior executives tend to be dominant personalities who may bully junior staff indirectly causing them to breach financial rules and regulations.
"The standards in most countries have increased incredibly with the appointment of non executive boards," he said.
"The issue for me is not the framework, the issue for me is the human interaction between the board and the executive, particularly in times of extreme growth."
Source: http://www.abc.net.au, By Sue Lannin
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