Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

Fraud cases hit a 22 year peak

by
9th Aug 2010
Save content
Have you found this content useful? Use the button above to save it to your profile.

UK companies and individuals lost some £608.5 million to scammers in the first half of this year – the highest loss for 22 years.

KPMG’s fraud barometer (which assesses serious fraud cases with charges in excess of £100,000 in the UK courts) found 166 cases of serious fraud in the first half of this year – the highest number of cases in a six month period in the barometer’s 22 year history.

The cases had a total value of £608.5 million. Although this figure was down 4.3% on the same period last year, the average value per case has risen.

London and the South East remained the biggest hotspot for fraud, accounting for over half the total cases (88) and equating to a staggering 81% (£493 million) by value. The North East is its nearest rival, with 26 cases reported at a value of £43 million. 

The report also found that there were more cases of employee fraud than management ones so far this year, but managers were stealing far greater amounts – some £135 million per case compared to £1 million per employee case. “Managers are clearly able to carry out larger frauds due to their positions of greater authority and the trust they are afforded,” said the report.

One example cited was a Birmingham finance boss who manipulated the profits of a steel supply firm to ensure a bonus by falsifying the company’s accounting records. He spent over £100,000 at a local lap dancing club, and by doing so 11 redundancies had to be made at the firm, which was nearly bought to its knees as a result of his actions.

Nevertheless, over half the total amount defrauded from UK companies and individuals (£391 million) was taken by professional criminals. Professional criminals most often targeted investors – 21 such cases were reported totalling £185 million in the first six months of the year. Financial institutions were also widely targeted in 28 cases worth £172 million.

‘Boiler room’ schemes remained a favourite scam for many professional fraudsters. Typically they involve firms operating from outside the UK where they try and persuade investors to part with money for shares that are worthless and impossible to sell-on, often at inflated prices. Vulnerable individuals are targeted which may make their often difficult situation even worse.

The barometer recorded five cases of boiler room fraud, totalling £84 million over the six month period.

“While interest rates remain low, it unsurprising that investors who are looking for new ways to grow their capital, remain susceptible to being targeted by fraudsters,” said Hitesh Patel, a partner at KPMG Forensic. “At the same time, professional criminals show themselves to be highly adaptable and always looking for new scams. As soon as one avenue is blocked, they will move on to another one. That is why it is important for investors to remain continually vigilant.”

The government was targeted in 38 cases worth £178 million - a number of government frauds were tax scams involving benefits, VAT, or carousel fraud.

“At a time when the country has a huge deficit, it’s clear that government needs to do all it can to protect itself from fraud and claw back lost funds. It becomes a problem that affects us all. Contrary to popular perception, fraud is not a victimless crime, particularly at a time when social welfare and infrastructure budgets need to be carefully protected. Any losses to fraud are losses from those budgets,” said Patel.

 

 

Tags:

Replies (3)

Please login or register to join the discussion.

avatar
By keithas
11th Aug 2010 14:20

Fiddling the figures

Number of cases, up; average value per case, up; total value of cases, down.

Hmmm? Is this yet another fraud?

 

Thanks (0)
avatar
By ricbol
11th Aug 2010 16:24

£135 million per case?

Transcribing figures from one report to another has resulted in errors - the 4th paragraph says "£135 million per case", when in fact KPMG reported £135 million in total (and £4 million per case).

I know these fraud figures are mind-bogglingly high but there is no excuse for inaccuracy, especially on an accountancy website, and the end result is lack of credibility in the whole report which is a shame.

Dick Bollard - www.thefraudadvisor.co.uk.

 

 

Thanks (0)
avatar
By Freeky1
11th Aug 2010 16:50

Language Timothy

"nearly bought to its knees" for how much? 

Thanks (0)