No love in the time of Coronavirus, a fraud, bribery and corruption epidemic?

In the midst of the COVID-19 crisis, a more familiar disease permeates our society – that of bribery and corruption.

Regrettably, such outbreaks create an ideal environment for criminals to exploit. It has happened before. During the 2014-16 Ebola crisis in West Africa, the British Red Cross lost approximately $5 million to bribery and corruption offences. Examples include overpriced supplies, salaries for non-existent aid workers and fake customs bills. There were also apparent incidents of Red Cross workers colluding with local banks to "skim off" up to $2m.

Companies like Amazon, eBay and Facebook have already removed adverts for products falsely claiming to cure the virus. Social media is being used to 'name and shame' those charging extortionate prices, potentially reaching millions of people.

Bribery can even manifest itself in the queue for hospital beds. Where hospitals run out of beds, ventilators or other key equipment, it is not uncommon for staff to take bribes when allocating priority. A 2017 European Commission report identified that 19% of EU citizens admit to paying bribes for health care in this way.

Defrauding the government aid package

Many criminals and organised crime gangs will undoubtedly be eager to exploit the £330bn package of financial measures announced by the government. It is not uncommon for 20% of such government aid schemes to be lost to fraudulent claims e.g. claims made by criminals posing as legitimate UK businesses or self-employed workers. Given the unprecedented size of the package and the timeframe for rolling it out, some leakage will be inevitable.  It remains to be seen if law enforcement agencies will be provided with the funding and resources they need to combat this threat.

Cybercrime

Cybercriminals have also jumped at the opportunity presented by the outbreak. Action Fraud is receiving increasing reports of phishing emails advertising information, tests and cures for the COVID-19 virus should they follow a malicious link. They have also received reports of online shopping scams where products like face masks and hand sanitizer are ordered but never arrive.

The National Fraud Intelligence Bureau has experienced a 400% increase in reports since the outbreak of Covid-19, with estimated losses already totalling £970,000.

Companies

Deloitte's Bribery and Corruption Report 2020 warns that the COVID-19 outbreak will increase the bribery and corruption threat for companies and reiterates that robust anti-bribery policies are imperative. The report focuses on participants from Australia and New Zealand but will be needed by companies throughout the world.

Interestingly the report reveals that Australasian organisations are more concerned about their workforce receiving bribes than paying them. The commercial pressure now exerted on much of society as people's livelihoods are threatened is thought to lead to an increase in dishonesty related offences.

This reinforces the findings of PWC's recent report released in March 2020 (see our summary here) that fraud perpetrated by 'insiders' is more common than you would think. Insider fraud is not only more difficult to predict and monitor but also potentially far more damaging. A key challenge for companies will be balancing trust in their workforce against these palpable risks.