Scots convictions for fraud at £50m high

According to KPMG Forensic's fraud barometer survey, there were 22 major fraud convictions in 2006. In 2005, 15 convictions covering 18m went through the courts.

Most of the convictions were in the first half of the year, including the high-profile case of Royal Bank of Scotland branch manager Donald MacKenzie, convicted for a five-year scam worth 21.3m.

Across the whole of the UK, the value of fraud convictions fell to 837m from 942m in 2005. But the number of cases rose by more than 50 to 277. The study, which measures convictions in UK Crown Courts involving fraud worth more than 100,000, is believed to be only a fraction of that actually committed, with most instances never brought to court.

The source of the most fraud by value remained managers stealing from their own companies, convicted for cases worth almost 350m, eight times the amount stolen by junior employees.

More than one in three convictions in 2006 were of professional criminals, chiefly in scams involving "VAT carousels", on items such as mobile phones and computer chips, and the evasion of duty on items such as cigarettes and fuel. The biggest single carousel case in the year was valued at 57m.

Overall, the government was the target of 312m of fraud in 2006, while the financial sector suffered 141m of fraud.

One English gang, operating before chip and PIN was introduced, used MP3 players to bug cash machines in bars, bingo halls and bowling alleys and capture the card details of unsuspecting bank customers as they withdrew their cash. This enabled them to create cloned cards and carry out 200,000 of fraudulent purchases.

Ken Milliken, head of forensics for KPMG in Scotland said: "It's obvious, with a third of all cases involving professional criminals, that they are now targeting fraud maybe as a softer target than an involvement in drugs or people trafficking, primarily because the sentences aren't as stringent.

"As well as harsher penalties there has to be a continuing focus on new emerging threats so that legislation can be changed and controls can be put in place to tie these areas down, because whatever the area of the crime, there has to be an opportunity to be taken advantage of."

The agency responsible for fighting criminal fraud in Scotland said there had been a marked improvement in information sharing to fight the crime.

Detective Chief Superintendent Stephen Ward from the Scottish Crime and Drug Enforcement Agency said criminal fraud was being given priority on a similar level to drugs because of its impact on business and the community.

The past 12 months had seen a "vastly improved interface" between police and the financial sector, including forums to share information and raise awareness of how to avoid falling victim to criminal gangs.

"This contact is essential because if, for instance, a bank detects a new technique [for committing fraud] then we need to be in a position to provide an early warning system both for other banks and law enforcement agencies to disrupt the activity."