FRAUD ‘Economic crime’ takes many forms, from asset misappropriation, financial statement fraud and bribery through to money laundering, tax fraud, insider trading and inter-company espionage. Whether committed by rogue employees or by outsiders, the impact of such crimes on an organisation can go well beyond the financial loss of the sums obtained: a fraud investigation, for example, can reduce investor confidence in a company and decimate its share price and credit rating.


Fraudsters commonly apply for corporate credit/debit cards, spend money on credit, order goods without authorisation and even withdraw funds direct from corporate accounts.


Rooting out economic crime within a business begins with encouraging ‘whistle blowing’ among staff and establishing effective sanctions against perpetrators. The Public Interest


Disclosure Act 1998 offers a framework for the protection of employees who make known their concerns about apparently criminal activity on the part of colleagues or superiors. Provided a disclosure is believed to be substantially true and made in good faith, the Act provides the employee with protection from sanctions.


Fraud prevention is more effective and cheaper than clearing up after a fraud has been uncovered. Introducing and promoting a corporate fraud awareness programme and anti-fraud policy should take priority, along with developing a strategy that encourages an anti-fraud culture among employees and third parties such as contractors and freelancers.


The success of anti-fraud measures depends ultimately on the endorsement and support of senior corporate management. Only with such backing


can come the resources and budgets to meet the threat of fraud.


There is growing evidence that identity thieves are now ‘trading up’ from personal to corporate fraud and are starting to clone the identities of entire businesses by exploiting gaps in regulation. For example, because Companies House is not required to verify paper document validity, there are no checks if impostors try to register as new company directors or change a business address. Companies House advises that companies should take advantage of its PROOF scheme, which affords secure electronic filing of documents to protect them against potential fraud.


To report fraud within the City of London you can contact the Fraud Desk on 020 7601 6999.


For further information visit the Serious Fraud Office web site at www.sfo.gov.uk and the National Fraud Authority.


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