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A growing tide of fraud

The Government, the police and the private sector need to take fraud more seriously.

All of us in the security industry are aware of the growing tide of fraud in what is becoming a multi-billion pound industry worldwide. I have dealt with my share of bounced cheques, fraudulent conversions and embezzlements, to use the old terms. But I saw on television the other day what a detective in the Met described as the biggest credit card fraud yet in the UK.

I know from my 35 years of policing that fraud always was a poor relation in the list of policing priorities. For one thing, the time such enquiries took meant that resources were tied up for months, if not years. And, if a murder or other serious incident broke, there was always a ready supply of manpower (or personnel, to be politically correct) to divert to the politically “sexy” enquiry.

That is why the private security industry, when properly vetted and licensed, can play such an important part in assisting the state in both preventing and detecting these lucrative scams.

It was reported recently that ten years after Asil Nadir went into exile leaving behind the wreckage of his £2.2 billion empire, many frauds go uninvestigated with many complainants being advised to take civil action to recover their losses. Now this may be good advice in some cases, but where there is a systematic course of dishonest behaviour, it is really not good enough.

And yet, we hear that the number of police investigators has fallen from 869 in 1995 to 600 this year. Some forces, it is alleged, are closing fraud squads, presumably to provide more police visibility in the fight against terrorism and anti-social behaviour. Fraud is seen almost as a victimless crime, with no public outcry, or perhaps more important, no media pressure to get a result quickly.

But it is the public, as always, who pick up the tab. There is no such thing as government money. It is our money, the hard-working taxpayer in the UK and it is important therefore that we ensure that it is not squandered and that those who spend it are called to account.

The estimate is that fraud costs £230 for every man, woman and child living in Britain, so it is even greater for us taxpayers, when you take out the non-contributors (including presumably the fraudsters themselves).

The Fraud Advisory Panel, an independent fraud watchdog which includes accountants and police, recently reported that business and government are not putting enough cash and effort into halting the rise in fraudulent activity. Ros Wright, chair of the panel and a former director of the Serious Fraud Office, said that the country faced “a rising tide of financial crime”. Fraud has risen from £1 billion in 1985 to more than £13.8 billion in 2000.

A survey by leading accountants found that more than half of all UK firms have been victims of fraud and 46% of the cases had been discovered by accident! The panel calls on companies to be more pro-active in this area and suggests that they be required by law to reveal to shareholders their policies and strategies against fraud.

All of us who have been police officers know how reluctant financial institutions are to reveal to the public at large how they have been defrauded, simply because it is “bad for their corporate image” of being a safe pair of hands for customers’ money. They are even more reluctant to disclose fraud involving directors or senior managers. This pussyfooting around has to change. If fraud is not know about, it cannot be tackled and it is the customer who loses in the long run through higher bank charges.

Finally, the report argues that the Government should set up a national fraud squad at a cost of some £85 million. The argument is that the unit would pay for itself in deterrence and recovering ill-gotten gains. I am not so sure it needs to be national, but there is certainly a case for building up and ring-fencing police fraud squads. There should certainly be a debate and the private security industry should be part of it, if not leading it!

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