The employees defrauding their companies are increasingly senior

It’s a fight to stay on the straight and narrow
It’s a fight to stay on the straight and narrow
Image: Reuters/Tyrone Siu
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Middle and senior management are the biggest culprits of fraud committed against employers, a survey by PricewaterhouseCoopers released today (Feb. 25) has found.

The global survey found that more than half of all insider fraud–any kind of malfeasance done by an employee of the firm, from theft to faking identity information–was perpetrated by higher ranking employees. And within the managerial class, fraud by senior employees in particular appears to be rising in regions like Asia and the UK.

The UK has seen a drop in the number of internal fraud cases committed by middle managers and junior staff over the years, according to the report. Fraud by middle managers in the country fell by nearly 30 points from 2011 to 2015, while junior-level staffers appear to be keeping clean. But fraud committed by UK senior staffers has seen a six-fold increase since 2011.

While not all senior staff are older than their underlings, the survey does breaks out internal fraud cases by age in the UK. It reveals the rise of the “silver fraudster,” or middle-aged male managers who are fiddling with accounts or taking kickbacks from contractors. Among British over-50s, the rate of internal fraud has tripled between 2014 and 2015. It’s also on the rise among the country’s over-40 set.

What’s driving this criminality among senior managers? The survey doesn’t provide any clear answers, although Tracey Groves, a PwC partner in the UK specializing in ethics and compliance, says one possibility is that the current lean economic environment might be putting pressure on staff to find ways to pay the bills.

“Maybe they don’t see their pensions coming through, and there’s a pressure to achieve more with less. They’re looking for alternative ways of compensation,” she told Quartz.

The idea of fraud driven by of economic upheaval is backed up by some criminologists studying white-collar crime, who think it’s the threat of losing economic or social status that motivates corporate fraudsters. Crimes like embezzlement, identity theft and insurance fraud spiked during the financial crash of 2008 and 2009, for example.

The majority of corporate fraud globally is still done by insiders, although that number’s coming down. So what are bosses on the straight and narrow supposed to do? Be better bosses, Groves advises, because simply putting more rules in place doesn’t necessarily stop a senior manager.

“The more senior you are, the easier it is to override those rules because you have authority and power. The best line of defense in any kind of economic crime is your people. If they’re able to collaborate, to challenge authority, then you’re in a far better position to mitigate the risk of something going wrong,” she says.