Credit crunch helps push serious fraud cases to record highs
25 January 2010
When a Scottish IT professional took it upon himself to print £185,000 of fake bank notes he struggled to convince police that he was pursuing a credible business venture. However, according to new figures, this case and £7bn of other serious frauds reached the courts during the last decade, peaking at £1.3bn in 2009.
The numbers add up to a big fraud headache for UK authorities, according to accountancy firm KPMG. It reckons that the 2009 figures are the highest in the 22 year history of its fraud reports, and rounded off a decade that saw the number of cases top 1,750, up from just 700 in the 1990s.
Hitesh Patel, a partner at KPMG Forensic, said: “Britain appears to have a rising fraud problem, as is evident by looking at the steady increase through the last ten years. The last decade, I am afraid, could certainly be dubbed the 'naughty Noughties'.”
Patel blames the credit crunch for making a bad situation worse, and that the full impact of the recession is yet to be felt. “The forecast therefore is: getting worse,” he said. “The comfort, if there is any, is that more fraud cases are successfully being brought to court.”
Patel reckons the higher numbers are also down to a combination of factors, with companies becoming better attuned to the signs of fraud as well as a greater focus on corporate governance and new laws and regulations to combat fraud that have been introduced.
“Nevertheless, what we see remains only the tip of the iceberg,” he said. “Despite the great efforts made to tackle white collar crime, companies will need to remain vigilant as the problem will never be eradicated. Fraudsters will only get more sophisticated."
Management in the dock
2009 saw the highest number of cases of serious fraud by managers and employees (123) since KPMG’s Fraud Barometer began. There was a major increase in fraud by company managers coming to court, with £335m of cases compared to £129m in 2008.
Elsewhere, mortgage fraud continued its steady rise in 2009. There were 31 cases worth £77m in the year, compared to 10 cases worth just £3.7m in 2007 and 25 cases worth £36m in 2008.
There were many cases of fraud within accounting and book-keeping departments - 33 cases worth a collective £44m came to court in 2009.
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