North West fraud at record high

REPORTED fraud in the North West has reached record levels at more than £52m and experts warn the situation is likely to worsen as the economic downturn takes hold.

The North West figure is the second highest since KMPG set up its fraud barometer 21 years ago, and 32 cases went to court, including a scientist who raked in more than £10m after setting up an illegal distillery in Manchester, and two Southport-based fraudsters who conned more than £1.8m from elderly and vulnerable victims.

Nationally, more than £1.1bn of fraud came to court last year more than in any other year since 1995.

The company’s forensic investigation unit said fraud by company managers, employees and customers trebled to £300m last year, while crime by professional gangs remained at the “extremely high” levels seen in previous years.

The report comes amid fears that the global recession will uncover huge frauds committed during the boom years.

The worst hit sector was financial services, which suffered £388m of fraud in 63 cases, a ten-fold increase on the £37m recorded in 2007.  However, this was in part fuelled by an alleged £220m attempt to hack into Sumitomo Matsui Banking Corporation’s systems which came to court in the first half of the year.

Damien Margeston, director at KPMG Forensic in the north warned the bulk of the fraud committed since the credit crunch began in 2007 was yet to come to court.
He said: “These figures are bad enough in themselves, but I fear the trend for the next couple of years will be even worse.

“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.”

KPMG said reported fraud reached a record £1.2bn in 1995 because this was when the peak of cases from the recession in the early 1990s reached court.