Huge rise in Yorkshire fraud

Jan 21 2009 by Henryk Zientek, Huddersfield Daily Examiner

FRAUD against Yorkshire companies soared by 84% last year, shock figures have revealed.

A Fraud Track report by accountancy firm BDO Stoy Hayward showed that the cost of frauds against firms in Yorkshire and the North-East totalled almost £133m in 2008, as against £72m in 2007.

But report author Simon Bevan, national head of BDO’s fraud services team, which is based in Leeds, said: “Our own experience is that FraudTrack only shows the tip of the fraud iceberg.

“I am certain that once a recession bites many more fraudsters will be uncovered.”

He added: “Out of the hundreds of investigations I have carried out fewer than 5% have gone through the criminal courts.

“The modest increase in reported fraud should not be seen as the giving of any comfort to UK plc. We will see corporate vessels running aground not just because of economic conditions, but also because they have been defrauded.

“This is just the beginning. We will see more and more fraud being uncovered in the next two years and some of these will be stunning in their size.”

Mr Bevan said retailing and the financial sectors had been the worst hit.

Retailers reported a 62% increase in fraud over the past two years at a time when stores were struggling to attract customers through the doors.

Fraud in the financial and insurance sector rose by 83% and accounted for three-fifths of all fraud in the UK.

Third party fraud – perpetrated by people such as suppliers and customers – rose three-fold last year to total £273m.

Mr Bevan warned that fraud might be harder to detect in the current climate as would-be whistle-blowers in companies keep quiet for fear of rocking the boat and losing their jobs.

The Fraud Track report showed a noticeable increase in custodial sentences for fraudsters.

But it said the motives of fraudsters remained unchanged, with greed and the desire to lead a lavish lifestyle giving rise to nearly two-thirds of all cases, followed by the need to meet debts.