The True Cost of White-collar Crime

A fraud affair such as the one currently under investigation at Bank Leumi, Heftsiba, or the cash-stuffed envelopes at the National Labor Union, cost the state more than the theft of thousands of cars.

Guy Leshem
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The damage caused to the Israeli economy by white collar crimes, which are defined by the law only as fraud, totaled over NIS 6.8 billion in 2007, according to the latest data released by the Israel Police. The police report spending some NIS 300,000 on an average investigation of white collar crime, dealt with by three investigators for three months.

Deputy Commissioner Basora Regev, who heads the strategic and statistical research section of the police planning branch, recently submitted a law doctoral thesis on the financial and quantitative aspects of law enforcement policy in white collar crime in Israel. Regev concluded that the average annual cost of white collar crime ranges between NIS 28 billion and NIS 30 billion, which is equivalent to 4.5% of the country's entire GDP.

Regev calculates that a 10% drop in crime could save the national economy NIS 800 million - NIS 3.4 billion annually, depending on the type of crime. "The marginal cost of fraud crimes is the highest, compared to their volume," she says. "While white collar crime constitutes 2% of all crimes, it causes about one quarter of all damage to the state." A fraud affair such as the one currently under investigation at Bank Leumi, Heftsiba, or the cash-stuffed envelopes at the National Labor Union, cost the state more than the theft of thousands of cars.