Page last updated at 09:56 GMT, Tuesday, 21 July 2009 10:56 UK

Recession 'causes fraud increase'

Calculator and money
The recession is expected to lead to further fraud cases

The value of fraud in Scotland for the first six months of this year has reached £19.5m, according to KPMG.

The accountancy firm said this compared with £24m for the whole of 2008. Scottish courts have already heard 12 serious cases of fraud this year.

The figures were dominated by allegations against nine people, including an Aberdeen solicitor, who were accused of a £7m property fraud.

KPMG said the recession would lead to a further increase in cases.

Earlier this month, Janet Perrie from Belshill was sentenced to 22 months in jail after embezzling £130,000 from the Scottish Conservative Party.

In June, a Broughty Ferry businessman appeared in court accused of avoiding VAT payments in excess of £6m.

Professional gangs

Ken Milliken, head of forensic at KPMG in Scotland said: "Following a significant year in 2008 for Scottish fraud, the number of cases and level of fraudulent activity seen by the Scottish courts so far this year has remained consistently high.

"Even small cases can cause extreme stress and suffering to those involved, and create major reputational and financial difficulties for the companies and individuals caught up in them."

He urged companies to prioritise anti-fraud efforts to protect themselves.

The Scottish trend has been replicated across the UK, with more than 160 cases of serious fraud coming before UK courts in the first half of 2009, the highest number of cases in a six month period in the 21 year history of KPMG's Fraud Barometer.

Professional gangs were the most active perpetrators of fraud, with 70 cases worth some £450m, and their main victims were investors, who suffered to the tune of £320m.

Much of this stemmed from a £200m investment case involving the attempted fraudulent sale of the Ritz hotel in London.

Company managers were also active perpetrators, responsible for £150m of fraud against their own employers in 32 cases.

Bogus payments

Government suffered £150m of fraud mostly in the form of tax and duty evasion and fraudulent benefit claims.

KPMG said determined and fraudulent managers continued to get away with their crimes over extended periods.

A charity finance manager in Manchester paid herself nearly half a million pounds over the course of a decade by creating fictitious invoices and processing bogus payments.

However some ordinary workers also pulled off audacious frauds, such as a construction company secretary in Merseyside who claimed she had cancer so that she could take compassionate leave from work - during which time she treated herself to plastic surgery and holidays with some of the £600,000 she had taken from the company and a previous employer by paying wages into her own account.

KPMG said it believed that the recession could lead to an increase in fraud because financial pressure on individuals made it a more attractive proposition.

The firm's fraud baromoteter has been running for 21 years and considers major fraud cases where charges are in excess of £100,000.



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SEE ALSO
Jail for woman who conned Tories
08 Jul 09 |  Edinburgh, East and Fife
Business fraud in Scotland soars
02 Jul 09 |  Scotland
Businesses warned of crime risks
07 Dec 08 |  North East/N Isles

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