Cash crisis hits fraud fight

Link: Lack of resources hinders UK fraud battle

Despite efforts to provide the police with less expensive experts through fraud accountancy panels, the cases remained uninvestigated because they were not considered ‘economically viable’.

The revelation came as Supt Ken Farrow, the head of the City of London Police’s fraud squad, hit out at the government for failing to set up a national fraud squad, a move that would cost £85m.

Farrow told Accountancy Age that although the fraud panels allowed police forces to use accountants at discounted rates, tight budgets meant local fraud squads could not call on the experts for assistance.

‘Budgets are so small that we need to be exceedingly careful of how much we can spend on each case,’ Farrow said.

‘Ultimately, we have to ask whether it is economically viable.’

Speaking at the ICAEW’s conference on fighting fraud this week, Farrow argued that the cost of setting up a national fraud squad would be ‘money well spent’. Economic crime is estimated to cost the UK economy up to £16bn a year.

A recent report written for the government by a group led by Serious Fraud Office director Ros Wright called for the creation of a national squad, but so far the government has failed to act on the findings.

But a spokesperson for the Home Office said: ‘Ministers across departments are all engaged in addressing this issue – there will soon be a meeting at a senior level to identify a way forward.’

Although the City of London Police maintained that fighting fraud was one of its main priorities, for most police forces fraud ‘doesn’t feature on the barometer’, according to Farrow. The government has set its priorities firmly on tackling drugs, violent crimes, burglary and car-related crime – fighting fraud was therefore seen as a low priority despite recent corporate scandals.

‘We seem to have gone backwards since Maxwell,’ Farrow told Accountancy Age.

Farrow also complained that the squads were having difficulty retaining staff because of competition from the private sector, including the fraud investigation units of the accountancy firms and the belief that fraud investigation work was a low priority for the police.

‘There are only 500 to 600 police fraud investigators … half of these may have been diverted from fraud cases to deal with other forms of serious crime,’ he said.

Separately, a new survey has revealed that four out of five employees would blow the whistle on their colleagues suspected of major frauds.

According to KPMG, there has been a significant turnaround in people’s behaviour following recent scandals. ‘People now recognise that it is not a victimless crime and that those who are responsible should be reported and then held to account for their actions,’ said Alex Plavsic, head of fraud investigations at KPMG.

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