Fraud relating to the Canterbury earthquakes could total $NZ2.25 billion ($1.84 billion) if events follow the same pattern as Hurricane Katrina in the US, a new report warns.

The number of scams is growing and the post-quake environment is perfect for fraud, according to KPMG, which surveyed more than 140 organisations in New Zealand.

Katrina triggered fraud of about $US6 billion ($5.8 billion) – 7.5% of the total rebuild spend; the same calculation applied to Canterbury’s $NZ30 billion ($24.55 billion) rebuild gives the $NZ2.25 billion figure.

While the Katrina experience may not be repeated, the amount of money changing hands means the risk is there, KPMG NZ National Lead Partner for Forensic Services Stephen Bell says.

He recommends appointing an independent monitor, although he accepts this will not please the residential sector due to the possibility of further delays.

But in the commercial sector, international experience shows such a move would “ultimately save money”, Mr Bell told insuranceNEWS.com.au.

In a small country where “everyone knows each other”, the procurement process needs to be completely transparent, he says.

KPMG NZ Senior Manager Forensic Blair Bulloch says the number of tip-offs is lower in New Zealand than elsewhere because there is less of a whistleblowing culture.

“Our culture is pretty laid back and there is a feeling that you shouldn’t dob in your mates.”

This, combined with the post-quake environment in which large amounts of money are quickly being paid out, creates an ideal opportunity for fraud, Mr Bulloch says.

“We are very concerned about it. Cash is being handed out at a very fast rate and fraud prevention is almost the last thing to be thought about.”

Businesses should introduce reporting procedures and make sure all staff are aware of them, he says.

Fraud awareness training is crucial and data analysis technology can be used to pinpoint suspicious trends and transactions.

The KPMG report gives specific New Zealand fraud statistics for the first time, following “growing national concern about both its extent and our ongoing ability to respond effectively to it”.

Respondents reported losing $NZ18.26 million ($14.94 million) to occupational fraud in the survey period (February 2010 to January 31 last year).

The figure is up more than 7% – or $NZ1.26 million ($1.03 million) – on 2006-08.

The average fraud loss was $NZ433,721 ($354,901); five respondents experienced losses of more than $NZ1 million ($818,270).

The three most vulnerable sectors were public administration and safety; financial and insurance; and manufacturing.

The survey showed just 17% of perpetrators were working within the targeted organisation.