Fraudsters better at bypassing procurement

5 July 2013

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5 July 2013 | Adam Leach

The amount of money lost to fraud in the supply chain for the first half of 2013 has ballooned by more than £60 million, according to KPMG. 

The accountancy firm’s latest Fraud barometer reported the value of supply chain fraud went up from less than £1 million in the first half of 2012 to around £61 million in the equivalent period of 2013. The majority of the increase, some £55 million, was attributed to a criminal deal that saw fake bomb detectors sold to the Iraqi authorities. 

Hitesh Patel, UK forensic partner at KPMG, said in a statement: “While procurement functions seek to do relevant due diligence checks on potential suppliers, fraudsters are increasingly getting smarter at circumventing traditional procurement processes and controls. Organisations need to make the most of the numerous data sources available and overlay that with the information they have on a third party they plan to do business with.”

Another case of supply chain fraud saw criminals dupe primary schools, health centres and a homeless charity into buying second hand photocopying equipment as new and then having to pay the fraudulent firm to fix them. The firm netted £600,000 through the scam.

The spike in supply chain fraud came as there was an increase in overall fraud. The barometer put the overall amount of money gained through scams in the first six months of the year more than £500 million, an increase of more than a quarter from the same period last year. This was attributed to rises in both purchasing and investor fraud.

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