Corruption may eat away $500 bn from global stimulus funds

NEW YORK: Fraudulent and corrupt practices are expected to swallow a whopping $500 billion out of $5 trillion stimulus fundings by governments worldwide, a global report has said.

According to global risk consultancy Kroll's latest edition of Global Fraud Report, government stimulus funding worldwide aggregating $5 trillion has introduced new opportunities for fraud and corruption worldwide.

Though governments are likely to struggle to keep the losses through corruption down, it would "still provide a staggering pot of $500 billion in corrupt gains," the report stated.

Citing data from Transparency International, the global coalition against corruption, the report stated that it has put into perspective the heightened risk brought on by the financial crisis.

"According to the coalition, corruption can raise procurement contract costs by at least 10 per cent in a stable economy - an equivalent of $ 500 billion in corrupt gains," the Kroll report stated.

Interestingly, in emergency situations these costs can rise as high as 30 per cent of the overall cost of the contract, it added.