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Exclusive: Big rise in business fraud as firms feel the pinch
FRAUD cases involving recession-hit Yorkshire businesses have soared during the credit crunch, stretching police resources to the limit.
Detectives and financial investigators have received an unprecedented rise in complaints as the economic downturn helped uncover years of dishonest bookkeeping.
Sweeping job cuts in the financial services sector have only made the position worse, as companies now have fewer staff to monitor employees' behaviour and carry out internal anti-fraud checks.
West Yorkshire Police, which has Britain's largest economic crime unit outside the City of London, revealed that it had seen a surge in allegations this year.
Det Chief Insp Steve Taylor said the unit had investigated 190 reports of company fraud during 2008, and had already received about 140 in the first five months of 2009, many relating to new businesses in Leeds and Bradford.
"We've never been as busy," he said. "We are inundated with the amount of allegations going on and we are having to make some tough decisions about how we deal with them.
"Our investigations used to take two years, but now we are doing them in six months."
A major inquiry found that 136m said to have gone through money service bureaux in Bradford last year could not be accounted for.
Det Chief Insp Taylor said: "In recession companies aren't doing the right checks because they're taking risks they wouldn't ordinarily have taken when times were good. They're being had for the same types of crime; it's crunch time."
A partner with financial services firm Ernst & Young in Leeds, Kevin Hills, said his team was investigating about "a dozen- plus" potential fraud cases in Yorkshire, compared with only four or five a year ago.
Although he stressed that not all the accusations of fraud would be substantiated, he warned that tolerance of unethical behaviour was rising at an alarming rate.
Mr Hills said fraud was often committed by senior managers who believed they might be saving their colleagues' jobs.
He described a case at an unnamed Yorkshire company where a finance director allegedly claimed a sale had been achieved earlier than it had, in order to protect jobs by ensuring that the business did not breach its banking covenants.
Another Yorkshire case relates to a company where a senior manager has allegedly "taken several million pounds out of the business" over six or seven years.
Mr Hills said the allegation only came to light because the overseas parent company had decided to close the firm.
He added that many people who committed fraud believed they were trying "not to let people down" while earnings were under pressure".
"Bribery and corruption is a major problem and cutting corners to do whatever it takes to get the job," he said. "Those who work in an organisation where that is the culture cannot see what is wrong with it."
A Serious Fraud Office spokesman said there was "no doubt" that the number of cases had risen during the recession.
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Sunday 12 February 2012
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