MIDLANDS COMPANIES MUST DO MORE TO PREVENT FRAUD
With news that the UK's economy has contracted for a record sixth consecutive quarter, Birmingham-based corporate detective agency Expert Investigations is warning Midlands businesses of a significant increase in corporate fraud.
Managing director David Kearns explained:"Every downturn brings about a rise in fraud levels, but what we are seeing in 2009 is the impact of one of the worst UK recessions in living memory.
"Businesses are experiencing far greater vulnerability due to a financially-forced decrease in internal controls, job cuts, pay cuts and reduced profitability.This all comes at a time when the rapid rate of technological advances is forcing companies to operate in a far more competitive and fast-moving environment.In short, the motives and opportunities for fraud have increased significantly." /EM>
Expert Investigations' findings are backed up by KPMG's Fraud Barometer, which highlights that UK fraud levels hit a record high in the first half of 2009, with an indication that there is worse to come.
More than 160 cases involving sums in excess of £100,000 passed through the courts from January to June, the highest number in the Barometer's 21 year history.The total value of cases was £636 million and, if replicated in the second half of 2009, would lead to the highest value of fraud ever recorded by the index.
According to Expert Investigations, which has spent the last decade working with Midlands companies and law firms on fraud-related cases, corporate fraud is increasingly evident at all levels.
David Kearns said:"There is currently a significant amount of small time theft, particularly cash taken from offices, but there is a distinct increase in our involvement in large-scale deceptions.Last month, we successfully investigated a theft of over £100,000 which implicated employees and wholesalers.
"At present, we are involved with a fraud case which has cost one business over £400,000.The manager of this national depot chain over-ordered products, set up his own company and used his depot staff to sell on the stock for his own gain.
"And it's not just single individuals who lie at the root of such activity.We recently investigated a fraud at a national plc in which company products were stolen by a whole departmental team working together, then sold on internet sites.The cost to the business was incalculable." /EM>
David Kearns believes that if the growth in fraud levels is to be stemmed, business owners must look at all aspects of their organisation.
He said:"We have just as much experience of directors and senior managers acting fraudulently as we do of those working on the shop floor.This is why it is absolutely crucial for companies to conduct regular risk assessments to isolate existing or potential problems and minimise or eradicate them.
"Avenue streams must also be put in place so that information can be reported efficiently across the business.Also important is educating staff on where and how fraud arises, as well as how it can be detected and prevented." /EM>
If fraud is discovered, then David Kearns advises that the business owner should not always alert the police immediately as it is vital to gather all evidence of wrongdoing before the perpetrator can dispose of it.
He explained:"The evidential trail must be followed to allow for a successful prosecution, whether internal or external.This is where specialist investigations teams, like ourselves, can be of help.
"In such instances, it is necessary to be patient, even if it means the guilty party continues to offend for a short time whilst evidence is gathered.However, once you are aware of the fraud, you can start to control it and can source the best route for the most appropriate outcome.
"All too often we see business owners jump in too early and the evidence is lost." /EM>
