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This year marks the fifth year of our FraudTrack research - new research shows that the number and value of business fraud cases going through the criminal courts is falling dramatically, and it warns that UK PLC are losing faith in the police in combating fraud by employees and executives.
This year, we identified 267 reported cases of business fraud (worth above £50,000) with a total value of £1.04 billion. This compares to 2006, when it identified 295 cases with a value of £1.37 billion, a reduction of 24 per cent. When large VAT frauds (against the Treasury) are removed, the figures are even starker, with non-VAT fraud cases of just £496 million reported in 2007 (compared to £913 million in 2006 – a fall of 46 per cent).
About 87 per cent (£432 million) per cent of these non-VAT frauds were reported by business in the financial services sector, with all other sectors of the economy accounting for only 13 per cent of reported (non-VAT) frauds. This means that organisations employing well over 80 per cent of the UK workforce are only reporting 13 per cent of fraud by value.
Findings from the survey include:
- Greed continues to be the main cause of fraud, accounting for 63 per cent of cases in 2007 (where a cause was cited). Problems from debts and gambling accounted for 23 per cent..
- VAT and other tax frauds reported in 2007 were worth £544 million, costing every UK adult over £18.50 in 2007. VAT fraud cost £10 for every man, woman and child in the UK in 2007.
- There has been a consistent fall in the average sentence length since 2003, particularly for frauds worth less than £1million. In 2003 the average custodial sentence was 3.06 years; in 2007 it was 2.77 years (a reduction of about 9.5 per cent).
- Fraud continues to be a man’s game, with men accounting for about 80 per cent of fraudsters. Virtually all frauds above £1million committed are by men.
- The value of reported fraud in the UK has increased by 153 per cent (from £411million) since 2003, when BDO Stoy Hayward started its FraudTrack analysis.
- In terms of the location of activity by fraudsters, London & the South East accounted for £343million (34 per cent) followed by the Midlands with £320million (32 per cent) and the North West £240million (24 per cent). London’s fraud figure is always high because it is the centre of the financial services industry.
Regional Breakdowns
| Location | Total 2007 | Total 2006 | % difference |
| East Anglia | £1,370,000.00 | £7,022,659.25 | 80% less |
| London & South East | £343,636,103.20 | £585,567,612.20 | 41% less |
| Midlands | £320,600,405.00 | £617,520,570.59 | 48% less |
| North East | £71,645,842.00 | £31,418,743.59 | 128% more |
| North West | £240,887,000.00 | £16,857,102.46 | 1329% more |
| Northern Ireland | £6,895,107.00 | £1,930,000.00 | 257% more |
| Scotland | £6,265,189.00 | £74,669,129.00 | 92% less |
| Wales | £1,498,900.00 | £18,310,870.33 | 92% less |
| West Country | £44,652,093.00 | £18,714,103.22 | 139% more |
| Total Fraud | £1,037,450,639.20 | £1,372,010,790.64 | 24% less |
About the FraudTrack research:
FraudTrack has been produced by BDO Stoy Hayward since 2003 and is based on all reported fraud cases involving businesses of over £50,000 during the period from 6 December 2006 to 31 November 2007. The sources for the database include: The Serious Fraud Office, the Department of Trade and Industry, the Metropolitan Police and the UK’s national, regional and local press. The data for 2007 represents 267 cases of fraud with a total value of £1.04.bn for the past year.
Please contact Tracey Kenworthy on 0113 204 1300 for further information.
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