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Last Updated: Thursday, 15 June 2006, 23:24 GMT 00:24 UK
Fighting fraud the regional way
By Jeremy Scott-Joynt
Business reporter, BBC News

Businesses like making money. Fraudsters like taking it away from them.

Can information-sharing bring fraud out of the shadows?

In theory, therefore, fraud cops should be pretty popular with the business fraternity.

But when Detective Inspector Phil Butler took over Northumbria Police's Economic Crime Unit (ECU) in early 2003, his early enthusiasm took something of a battering.

"I put on a seminar with local firms, and they were very anti the police," he says. "That came as a huge shock.

"They asked me what we were doing to protect the business community. And I had to admit: not much."

Under pressure

His colleagues up and down the country might well sympathise.

Fraud squads have shrunk in recent years, as other priorities draw staff away.

The results: an ever-higher threshold for police to tackle fraud and lengthening delays - all part of a reactive approach which, many officers agree, falls short.

Against that background, the Northumbria force is looking like a bit of an anomaly.

In the past three-and-a-half years, its economic crime unit has grown from 16 police officers and civilian staff to more than 40.

If you can pull out the bricks - including dodgy accountants, lawyers and so on - then the house falls down
Phil Butler, Northumbria Police

Partly, Phil Butler says, the growth has been possible because the unit has sold its skills to the rest of Northumbria Police.

Economic crime has been the poor relation, because fraud barely figures in the Home Office's National Policing Plan.

In contrast, organised crime is top of the to-do list - and attacking criminal profits is widely seen as one of the best ways to tackle it.

Who, Det Insp Butler has argued, knows better than fraud squads how to follow the money?

Add in the importance of locating the professionals who grease the wheels of criminal finance, and bring in computer crime under the same umbrella, and the growth in the ECU begins to make sense.

"If you can pull out the bricks - including dodgy accountants, lawyers and so on - then the house falls down," he says.

Knowing me, knowing you

Three years on and the tone of the business community has changed too.

The main driving force is the North-East Fraud Forum.

St James's Park
St James's Park helped kick-start the Forum

Founded in mid-2003, Neff brings the police and the private sector together to share information, intelligence and experience, in the hope of preventing fraud as well as detecting it after the fact.

Its members say it has built trust across a divide which has too often produced poor communication - and even suspicion.

"Four or five years ago, I would never get the police in," says Peter Smith, who runs his own forensic accounting firm, Quantis, in the North-East.

"But now there's the link, I'll pick up the phone."


It all started, Phil Butler says, from that discouraging meeting in 2003.

Soon afterwards, all 16 members of the fledgling ECU were brainstorming what they should do.

"We realised we were good at enforcement, but it would be nice to do prevention too," he says.

That demanded partnerships. Up on a whiteboard went all the unit's public-sector partners - such as the Crown Prosecution Service, HM Customs and Revenue, and neighbouring forces.

"But then I thought: that's not enough. So I wrote up our private partners on the other side of the board. Then, in a bubble in the middle, I wrote 'North East Fraud Forum'."

With advice and support from accountancy firm RSM Robson Rhodes, and the backing of the Government Office for the North-East, Neff was born.

An idea is all very well - but how to sell it? Local government was keen - as were local retailers, who already shared information about known shoplifters and fraudsters amongst themselves.

An inaugural conference held at St James's Park - home of Newcastle United and close to many a Geordie heart - attracted 400 people.

It's not about people being London-centric - it's about them not having known who to talk to
Mark Heath, Watson Burton

After 10 months, Axa Insurance's business crime index showed economic crime down 32%.

"It's about ring-fencing the region and protecting the local economy," Phil Butler says.

"I want to make sure that a Worldcom can't happen here."

Time to talk

Since then, the forum has held a seminar or masterclass every month - free for members - bringing in experts to talk about subjects ranging from handling whistleblowers to VAT fraud.

Its members say the most important element is simply to get people from across the range of fraudbusters talking.

The forum, says Mark Heath, partner at Newcastle law firm Watson Burton, has been the "sweet spot".

"Before, there were lots of [fraud] professionals - in banks, retailers and so on - and they didn't talk to each other," he says.

"So dishonest employees went from one to the next. Phil got us to share intelligence."

Laptop and banknotes
Putting fraud and hi-tech crime together has paid dividends

Not that the boost to the private sector fraudbusting business is unwelcome either.

Whereas once potential clients might have thought they needed to turn to big London firms for help, the forum now puts them side by side with local experts.

"It's not about people being London-centric," Mark Heath says. "It's about them not having known who to talk to."

Spread the word

The Neff approach is beginning to attract attention from elsewhere in the UK.

The South-West Fraud Forum is up and running. Another, in the north-west of England, is due to open its doors in September. Yorkshire & Humberside plans to follow suit next year, and the East of Scotland Fraud Forum is also on the drawing board.

And London is getting in on the act too.

The Metropolitan Police has been running its own economic crime initiative, Operation Sterling, for a year now - but is starting talks to map out its own public-private forum.

Detective Chief Inspector Stuart Darke, in charge of the project, points out that prevention has always been at the heart of Sterling.

Up and running:
North East Fraud Forum
South West Fraud Forum
In development:
East of Scotland Fraud Forum
North West Fraud Forum
East England Fraud Forum
Yorkshire and Humberside Fraud Forum
Also in the pipeline:
Fraud Forum for London
European Fraud Forum

The forum approach, he argues, can make sure that everyone learns from experience - without necessarily having to suffer for it first.

"The gap between the people at the very top - the big companies - and the knowledge level of smaller firms is growing every year," he says.

"The fraudsters aren't going after the big companies so much. So the big question is: how do we get the big guys to pass on their years of learning to make the smaller ones more fraud aware?"

The right direction?

So can this kind of approach reverse the slide of resources away from fraud?

Former Detective Chief Superintendent Ken Farrow thinks it might.

Until August 2005, he led the City of London Police's Economic Crime Department - the biggest concentration of specialist fraud detectives in the country.

He has long criticised the low status of fraud investigation in the UK - but the Neff model, he says, could be a way back.

"Anything that raises the profile of the problem of fraud is a step in the right direction," he says.

"This is just the sort of thing that captures the imagination of chief officers."

There remains the "level 2" problem, of how to tackle fraud which transcends local borders but slips under the radar on a national level.

But fraud forums are all about getting people talking. And as they multiply, who knows what they could tell each other?

This is the second article in a two-part series on the UK's problems with economic crime. The first part, outlining the scale of the issue, was published on Wednesday 14 June.

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