Pressure on staff to hide losses and meet bonus targets sent the cost to UK business of serious fraud spiralling last year, according to KPMG, writes Chris Quick.
Figures released by the firm this week show the cost of serious fraud increased from #121m in 1997 to more than #279m in 1998.
The figures are calculated from frauds which have led to criminal charges, such as those laid against ex-fund manager Peter Young, who was sacked by Deutsche Morgan Grenfell last year. The number of such cases increased from 55 in 1997 to 60 last year, each costing over #100,000.
Alex Plavsic, fraud investigation partner at KPMG, said that due to the time lag in finding and reporting fraud, many of these cases related to the investment and pyramid scams of the mid-1990s.
He added, however: ‘The frauds we are seeing today continue the upward trend but are of different types – they appear to be the product of less prosperous times.
‘I have seen numerous recent cases of accounts manipulation and management override in order to cover losses and maintain income and bonus levels.’
Plavsic warned that management should always be ready to act forcefully as soon as suspicions come to light to prevent losses from spiralling.
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