Major frauds against public sector reach record levels

Anti-fraud measures in the public sector need to be reviewed and strengthened following a record number of major fraud cases in 2010, according to KPMG.

The accountancy firm’s Fraud Barometer revealed that 42% of all cases in 2010 were directed at the public purse. The number of cases affecting the public sector rose by 20% on 2009 to 70; they were worth a combined £571m. The Fraud Barometer covers cases in the UK’s Crown Courts, where charges are in excess of £100,000.

Hitesh Patel, KPMG forensic partner, said: "Government agencies, like commercial businesses, have been increasingly vulnerable to the threat of fraud. In a year of austerity measures implemented by Government, tax increases, the threat of rising unemployment, and significant structural change it is hardly surprising that the long fingers of the fraudster have reached into the public purse.

"Fraud is not a victimless crime, particularly at a time when the country deficit is so high. Anti-fraud measures need to be reviewed and amplified by the public sector to combat this assault.”

The overall volume of UK fraud cases was at its highest level in the 23 years that KPMG has been running the Fraud Barometer. There were 314 incidents in 2010, up from 271 the previous year.

Frauds carried out by management caused greater financial damage than those conducted by employees. Nevertheless, professional criminals remain the biggest threat to the UK, responsible for 51% of fraud by value.

Hitesh said: "Professional gangs are the chameleons for the fraud world: constantly changing their colours to constantly creep one step ahead of technological development, exploiting business evolution for nefarious ends.”