Scotland's cases of fraud against businesses fall by half

Businesses in Scotland lost £1.8 million to alleged fraud in the first half of the year '“ a significant drop on the same period last year, according to figures out today.

Ken Milliken, head of forensic for KPMG in Scotland. Picture: Contributed

Although the fall in Scotland, from £3.8m, compared favourably to the rest of the UK where the value of fraud rose by 25 per cent, the reduction could be due to fraudsters targeting smaller amounts to evade detection.

The figures compiled by KPMG show that there were nine high-value cases involving frauds of £100,000 or more reaching the Scottish courts so far this year.

Embezzlement from employers was the main source of alleged fraud in Scotland, accounting for £1.1m, and the number of cases more than doubled compared to the first half of 2017, from two to five. The cases involved staff stealing money from employers, often to fund lavish lifestyles, including trips abroad.

Ken Milliken, head of forensic for KPMG in Scotland, said: “The figures suggest that more businesses have been affected by embezzlement but that employees have attempted to steal smaller sums, reducing the chances of being caught.”

One case saw an employee steal a total of £600,000 over the course of 14 years, spreading out their fraudulent activity.

Other cases included a worker who stole a total of £136,000 from two employers, causing one to go into liquidation, and a hacker who ordered £129,000 worth of goods using stolen customer details from an online retailer.

Milliken said the latest figures highlighted how important it is for businesses to have safeguards in place to minimise the risk of embezzlement, such as making sure that employees in key positions are supervised and that there are strong controls over cash payments.

“This may seem simple, but smaller businesses are often stretched for resources, and in one particular case this year, the resulting fraud led to the liquidation of a small firm.”

Despite the focus on cyber fraud, there were only two cases of larger scale internet-enabled fraud in the latest figures.

“Much of the online scamming activity which affects us is cross-border, originating outside Scotland and indeed often outside the UK. This is a reminder of how international the threat is and how these local court figures only tell part of the story,” said Milliken.

UK-wide, the value of alleged fraud reaching UK courts in the first half of 2018 reached £895m following 2017’s record breaking year, which saw £3.6 billion of fraud recorded.