KPMG Forensic’s Fraud Barometer,
January 2010
Record fraud in 2009 closes out the ‘naughty Noughties’
- £1.3bn of fraud in 2009 – highest in 22 years of KPMG’s Fraud Barometer
- UK’s fraud problem rises steadily through the decade
- £7bn of fraud and 1,750 cases in 2000s
- Just 700 cases in 1990s
- Step-change since 2005
- Outlook: getting worse
- Yorkshire: 2009 - £29.5m of serious fraud
The 2000s were a decade of fraud, according to KPMG Forensic’s Fraud Barometer, reaching a peak in 2009 when a record £1.3bn of fraud came to court. This is the highest figure since KPMG began compiling data back in 1987. Taken together, the 2000s saw a major uplift in serious fraud cases compared to the 1990s – some 1,750 cases of serious fraud (where the charges are at a value of £100,000 or more) came to court, compared to only 700 cases in the 1990s. Over £7bn of fraud was heard in Britain’s courts in the ‘Noughties’, compared to less than £5bn in the 1990s.
In Yorkshire the decade has been rounded off in 2009 with 29 cases of serious fraud totalling £29.5m. Cases that appeared in the region’s courts in the last six months include convictions for:
- A £500,000 mortgage fraud by a bank customer who was assisted by a mortgage broker, accountant and solicitor;
- A £3,265,000 ‘asset stripping’ business fraud which resulted in the collapse of three Sheffield companies and the loss of 46 jobs. A group of people fraudulently acquired the companies as collateral against loans which they used to pay for lifestyle costs including holidays; and
- A businessman in Grimsby who defrauded creditors of £280,000 before being made bankrupt.
Vivien Osborne, director in KPMG’s Leeds Forensic practice, said: “Britain appears to have a rising fraud problem, as is evident by looking at the steady increase through the last ten years. The last decade, I am afraid, could certainly be dubbed the ‘naughty Noughties’. The credit crunch will undoubtedly make the situation worse, and we are yet to see the full impact of it. The forecast therefore is: getting worse. The comfort, if there is any, is that more fraud cases are successfully being brought to court. This is the result of a combination of factors: companies have become better attuned to the signs of fraud; there has been a greater focus on corporate governance; and new laws and regulations to combat fraud have been introduced. Nevertheless, what we see remains only the tip of the iceberg. Despite great efforts made to tackle white collar crime, companies will need to remain vigilant as the problem will never be eradicated. Fraudsters will only get more sophisticated.”
The 2009 figures continue a trend of historically high fraud levels that has been especially evident since 2005. The last five years have seen a particularly worrying step-change where annual fraud has been at or near £1bn with 200 cases or more.
The 2000s were also characterised by a series of fraud ‘super-cases’ – though none of these have to date occurred in the UK. The alleged frauds by individuals such as Bernard Madoff, Allen Stanford and Jerome Kerviel have run into the billions in their estimated value.
“Over the last ten years, the boom in technology has acted as a catalyst for a boom in fraud,” Vivien Osborne said. “Computerisation and globalisation have made fraud easier, quicker to carry out and easier to conceal. Organised criminals in particular have taken advantage of this. Identity theft is a continual problem, alongside more ‘traditional’ frauds including insider trading and price-fixing cartels. The authorities in turn have sought to professionalise the fight against fraud in response.”
Further information about the Barometer can be viewed here.
