Fraud breaks £1bn barrier in six months

Research from BDO shows that the value of fraud in the first six months of
the year has risen to just over £1bn, the first time it has reached that level
since regular reports were launched by the firm seven years ago.

Simon Bevan, head of fraud services at BDO, said the recession was seeing a
rise in “revenue dilution fraud” where managers set up companies within
companies or divert lucrative contracts away from their own companies to third
parties.

He said there was also a rise in insider dealing.

“We have combination of political pressure and the understandable desire, in
a downturn, for the public sector and corporates to be seen to have a zero
tolerance policy. We are therefore likely to see increasing regulatory action.”

Bevan expects an increasingly robust response from regulators. He added that
there was anecdotal evidence that law firms were beginning to hire specialists
in market abuse.

The research also revealed that the average fraud is now almost £6m, a rise
from the £5m of last year.

Bevan added: “Fraud is as prevalent now as it has even been and companies
need to turn the vigilance screm up a couple more notches in recessionary times.
“

Around 16% of reported fraud has its origins with internal management while
17% begins with third party customers and suppliers. Almost half of all fraud is
committed in the finance and insurance sectors.

Read more:

Accountant
jailed for £1.3m fraud

Taxman
has £90m fraud victory

Fraud
major concern in recovery