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AIA

Pension scheme hit by fraud

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19th Jul 2013
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The National Employment Savings Trust Corporation (Nest) was the victim of a £1.4m “mandate" fraud after payments were fraudulently diverted to suppliers, according to a report by the National Audit Office (NAO).

The NAO qualified its opinion of the corporation’s accounts for 2012-13 because of the fraud.

Nest Corporation is the trustee of the Nest occupational pension scheme which is run on a not-for-profit basis, and ensures that all employers have access to suitable, low-charge pension provision to meet their new duty to enrol all eligible workers into a workplace pension automatically.

The fraud led to a “material loss” of public funds, Amyas Morse, comptroller and auditor general said in his report. The fraud occurred because of a “significant control failure”.

Since the fraud, Nest has strengthened controls over the payment process, the NAO said.

A growing number of public bodies like councils and NHS trusts are falling victim to a new crime known as mandate fraud, Channel 4 News reported last year.

The fraudsters contact their target, saying they're calling from a company that holds a contract with them. They'll introduce themselves as the new accounts manager at that company, and maybe give a new phone number.

The fraudster sends a letter saying the company's bank details have changed and all future payments need to go into a new account - which is actually controlled by the fraudster.

When the police catch up with the person who controls that bank account, they invariably discover they are just a "money mule", someone who allowed their bank account details to be used in return for small cut.

By the time the "mule" is under arrest, the vast bulk of the funds has usually been transferred into a maze of untraceable accounts, accessible to the real criminal masterminds.

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