Corporate frauds rise five-fold in 2008; more to come, warns KPMG

02 February 2009

The current global economic turmoil and recession in many countries will give rise to economic frauds, which touched more than £1billion in the UK in 2008, the highest in 13 years warns global auditing firm KPMG, and likely to increase as the economic downturn tightens its stranglehold on most countries.

According to KPMG's Fraud Barometer, more than £1 billion frauds were bought to the UK courts last year, the second highest since 21 years, eversince the auditing firm first started the survey in 1987. Frauds in 2008 were also the highest since 1995.

''The 2008 figures are bad enough in themselves, but I fear the trend for the next couple of years will be even worse . . . the real impact of the credit crunch on fraud is yet to be fully felt,'' Hitesh Patel, a fraud investigations partner in KPMG, said.

Corporate frauds were £125 million, a five-fold increase while accounting frauds were over £145 million, compared to £22 million in 2007 while the fraud by individuals increased three-fold from 2007 to around £300 million.

"As the global economic downturn takes hold and organisations look ever more closely at their operations it is very likely that more fraud will come to light so that the real impact of the credit crunch on fraud is yet to be fully felt," the report said.

The financial services sector fraud was at £388 million, which was a 10-fold increase on 2007 although £229 million was accounted for when an international gang of computer hacker's, hatched a daring plan to steal the money from Sumitomo Matsui Banking Corporation's branch in London. (See: Hackers try to steal £229 million from Japanese bank in London)