Recession-hit Yorkshire businesses hit by £18m fraud losses in six months

Professional services firm KPMG today released its survey of fraud across the country and its Leeds-based team said companies were “fighting more fraud than ever before”.

According to the figures, the greatest losses have been borne by Government agencies, but statistics reveal that the private sector is under increasing attack.

Nationally, fraud cost £1.1bn with private firms shouldering £266m of the burden, a figure that is up by a third compared to last year’s figures.

Vivienne Osborne, forensic director at KPMG in Leeds, said 23 large fraud cases involving more than £100,000 had been heard in the region’s courts between January and June.

One involved a Leeds teacher who was jailed for a £1.7m mortgage fraud, while another involved a Bradford finance director who stole £1.3m from her employers.

Ms Osborne added: “The evolution of e-commerce, as well as reliance on automated payment systems and the ability of professional criminals to stay one step ahead, has swollen overall UK fraud figures.

“But, fraud levelled at UK businesses tears at the very fabric of the economy.

“Although it is just as prevalent in larger organisations, the small and medium-sized companies (SMEs) are more likely to suffer dire consequences as a result.

“For SMEs, fraud can often lead to significant cash flow problems resulting in redundancies and at worst a fight for survival. The impact of fraud can be long lasting, affecting the organisation’s growth and competitiveness.

“It may dampen customer and staff confidence, cause reputational damage and detract from simply running the business,”

KPMG said the majority of fraud was committed by professional criminals, fraud perpetrated by criminal gangs rising by 107 per cent in the first half of 2011.

The figures also show that internal fraud committed by employees rose, the value of such crime rocketing from £181m in the first six months of 2010 to £225m over the same time this year.

Ms Osborne added; “This huge increase in fraud hitting the private sector demonstrates the importance of ensuring companies have mechanisms to prevent fraud and detect misconduct effectively.

“In order to guard against professional criminals, and those inside the business, companies must fully assess where in their operations they are vulnerable.

“They should arm themselves with a set of controls that enable greater detection, such as whistle-blowing lines, while thoroughly mining the wealth of data that sits within an organisation, which if analysed would identify fraudulent activity.”