| Fraudsters an increasing continuity threat to UK businesses
In all, 174 fraud cases came to court last year, with a total value just under £330 million. Despite a small drop in the cost of fraud from 2003 – which ran at £374.5 million – over the past five years, there has been an almost threefold increase in fraud cases being tried in UK courts. Management and employees accounted for a third of all cases, defrauding their companies of around £106 million. The research reveals a growing problem of workers processing payments to bogus companies or adding fake workers on to the payroll. Last year, UK businesses paid several million pounds to phantom workers and almost £70 million in bogus invoices. Simply stealing or forging company cheques also remained a popular way to remove money from a business. The Fraud Barometer’s findings follow a YouGov survey commissioned by KPMG at the end of 2004 which showed that of those who had witnessed wrong-doing at work (44 percent overall), 23 percent cited colleagues processing fake transactions. In one case tracked by the Fraud Barometer, a payroll employee simply sent names of bogus employees to the accounts department who set up weekly payments into her account. The employee got away with over £103,000 and was only discovered by accident when the company investigated an error in a genuine employee’s wages. In another case, a Head Office manager of a High Street chain submitted fictitious invoices to Head Office for shop refurbishment. In a two and a half year period the employee got away with over £400,000. The activities of organised crime continue to dominate the large-scale fraud cases with professional criminals, involved in VAT scams, counterfeiting and tax evasion, accounting for 54 percent of all frauds (by value), up 13 percent on 2003, costing in excess of £180 million. The Government is still the biggest victim of fraud, with fraud costing £174 million in 2004 in lost revenue. David Alexander, Fraud Investigation Partner at KPMG commented, “The rise in the number of cases overall is bad news for UK businesses. Whilst the number of “super-size” cases has fallen, more companies than ever are falling victim to fraud. Whilst our survey covers fraud cases over £100,000 we often find that losing even what may be relatively small amounts of money can disrupt cash flow and bring quite large businesses to their knees.” Alexander added that many of the frauds suffered by UK businesses could have been avoided. “Simple but robust internal controls can prevent management, employees, customers and suppliers from exploiting weaknesses. Companies can also step up their proactive checks for fraud. There are technical tools available that can sift through large volumes of data to identify fraud red-flags. Such tools can help to identify fictitious customers, false invoices, ghost employees, duplicate payments, false expenses and company credit card abuses.”
•Date:
1st February 2005 • Region: UK •Type:
Article •Topic:
BC general |
