A fifth of global companies chose not to invest in an emerging market in the
last year based on the false perception that risk of fraud is too great in these
markets, a survey by Ernst & Young has found.
The firm interviewed 600 international corporate leaders and found that both
developed (60%) and emerging market (86%) companies believe that fraud risk lies
primarily in emerging markets.
In reality though, the survey found that 75% of fraud happens in developed
markets and just 32% in emerging markets.
John Smart, partner in Ernst & Young’s fraud investigation & dispute
services practice, said ‘There is a clear gap between the experience and
perception of fraud among large international companies, who are fearful of the
risks and dangers of fraud in emerging markets, preventing them from making
investments into countries such as China and India.’
Smart said that while there were many risks of entering into an emerging
market, ‘fraud is an issue in every market’
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