Businesses lose £39 million to fraudsters

THE amount of money lost by businesses and the public sector in Scotland to larger frauds increased by 670 per cent last year, research reveals today.

The 39.4 million in reported fraud north of the Border has contributed to the 2 billion barrier being broken for the first time in the UK as a whole.

In 2008, the figure was 5.1m, according to accountants and business advisers BDO LLP.

The firm warns that annual reported corporate fraud could treble in the next three years.

The dramatic increase is almost certainly the result of management uncovering fraud as the recession sharpens their focus on questioning costs and tighter cashflow and credit, making fraud harder to hide.

Judith Scott, director of forensic accounting at BDO in Scotland, said: "We see this time and again. Businesses are often cavalier with regard to risk during boom times, and then wonder where it all went wrong when the rug is pulled from under their feet.

"However, this is by far the steepest increase in fraud levels since our report began seven years ago.

"Then, the average value of each fraud was around the 1.8m mark. Now it's closer to 5m.

"We warned businesses this time last year that fraud levels were set to rocket, largely due to the recession. Our mid-year figures pointed to a 400 per cent increase, but the final total is staggering.

"The really bad news is that experience tells us we've yet to hit a peak."