12 January 2010 I Jake Kanter
More than £2 billion of fraud occurred in UK businesses last year, according to the annual review by accountancy firm BDO.
It is the first time the cost of recorded corruption in UKPLC has exceeded the £2 billion barrier in the six years the company has measured all forms of publicly reported fraud - including procurement and other financial corruption.
The amount organisations lost increased 76 per cent on 2008, the report found, with the average value of each fraud reaching over £5 million.
The sharp rise in losses barely scratches the surface, warned Simon Bevan, head of fraud at BDO, who expects the value of illegal schemes to reach £5 billion in the next two years. BDO anticipates the rise will be revealed by organisations monitoring their costs more closely during the downturn.
“We see it time and time again, with businesses being cavalier with regard to risk in boom times, but wondering where it all went wrong when the rug is pulled from under their feet by a recession,” Bevan said.
“Fraud and insolvency often go hand in hand. If you need a margin of 17 per cent to survive but are losing 3 per cent due to collusion between your buyers and your suppliers then it is hard to recover from that position.”