Fraud up in commerce and public sector

The value of commercial fraud rose 11% to Pounds 82m in 2000, while in the public sector, fraud was up 5% to Pounds 12.9m.

Furthermore, 80% of all civil and criminal cases where committed by companies or organisations within these two sectors, according to figures from a report by KPMG’s forensic accounting practice.

Such figures bucked a general trend, which saw fraud fall to its lowest level since 1996. However, the value of fraud cases has fluctuated dramatically in the last 10 years, rising as high as Pounds 1.2bn in 1995, only to fall to as low as Pounds 95m the following year, and Pounds 116m in 1997.

In 2000 fraud fell to Pounds 192m, compared to Pounds 667m in 1999, despite a drop of just 13% in the number of court cases. However, KPMG said these figures were largely misleading, and did not reveal the true extent of fraud cases in the UK.

It added: ‘In 2000, KPMG’s forensic team investigated a record number of cases alleging fraud.’

The explanation, according to KPMG, for the sharp drop in court actions was due to fraud victims entrusting the help of the private sector, rather than the court system. to pursue their cases.

In general, business and government departments were the centre of majority of fraudulent activities, both as perpetrators and as victims of it. Companies accounted for 40% of fraud victims, followed closely by government departments at 37%, up 10% and 4% respectively.

And business managers were three times more likely than employees to commit fraud. 34% of fraud was perpetrated by company managers, who also accounted for 40% of the defendants in court.

Jeremy Outen of KPMG said often the pressures of the business environment led to managers risking fraud to produce desired results.

He added: ‘Our advice is always to pursue both civil and criminal routes where this is possible. We recommend that fraud prevention must also be embedded in the business and this is ultimately the responsibility of the Board.’


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