British business and government are failing to back their good anti-fraud intentions with firm will and cash, it is claimed.
The claim comes in the latest annual review published by independent watchdog the Fraud Advisory Panel, chaired by Ros Wright, who until April was Director of the Serious Fraud Office. The Fraud Advisory Panel was founded in 1998 by the Institute of Chartered Accountants in England & Wales (ICAEW), which continues to be the Panel’s main sponsor.
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What she says
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Mrs Wright said: ‘Fraud is less about headline incidents and more to do with a rising tide of financial crime. It cost £1 billion in 1985, £4 billion in 1994 and at least £13.8 billion in 2000 – £230 for every man, woman and child in Britain. Our current inadequate response is simply inviting ever higher fraud bills. Fighting fraud demands funding, systems, vigilance and co-ordination. Encouragement and warm words must be supported by the will to implement them.’ She gave three "crucial examples":
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The number of police fraud investigators fell from 869 in 1995 to around only 600 in this year. Many frauds are going uninvestigated and some county fraud squads have closed altogether.
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A recent survey by PricewaterhouseCoopers survey found that 51pc of UK companies had been victims of financial crime. Yet 46pc had discovered fraud by accident compared to only 43pc who did so via their internal controls. Only 26pc provided anti-fraud training for their managers.
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None of the recent reports on corporate governance (nor the revised Combined Code) give any prominence to fraud prevention despite it being one of the gravest risks to corporate survival.
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The FAP advocates two immediate policy changes, one for government, one for business:
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Give the police the resources to fight fraud. It would cost around £85 million to create, and provide support infrastructure for, a National Fraud Squad with 1,200 officers (see "Notes to Editors"). This would quickly pay for itself via deterrence, recovery of stolen funds and confiscation of criminal assets.
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Upgrade the Combined Code on Corporate Governance so that listed companies must report to shareholders on their anti-fraud policies and programmes or the lack of them. They should also be required to report material fraud involving directors, or senior management, to shareholders who have a right to know about monies or assets stolen from them. Visit www.fraudadvisorypanel.org
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About the Fraud Advisory Panel
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The FAP is a body of volunteers drawn from the law and accountancy, banking, insurance, commerce, regulators, law enforcement, government departments, public agencies and academics. Founded in 1998 by an initiative of the Institute of Chartered Accountants in England and Wales (ICAEW) the role is to alert the nation to the immense social and economic damage caused by fraud and help both public and private sectors to fight back.
