Business fraud surpasses the £1 billion mark
Business fraud smashed records last year by crossing the £1 billion mark for the first time, new figures show.
The cost of scams jumped by 40 per cent to £1.37 billion in 2006, up from £1 billion in 2005, said accountants BDO Stoy Hayward.
However, the figure is more likely to be around £5 billion as companies fail to report online crime for fear of damage to their brand and reputation, according to the firm's annual FraudTrack survey. The report claims that unreported fraud accounted for 85 per cent of all theft and had soared to £5 billion.
The survey also found that most business thefts are linked to VAT fraud, also known as the "carousel" fraud, with the Midlands the worst hit. London and the South-East also reported rises.
Simon Bevan, the head of fraud services at BDO Stoy Hayward said: "We like to kid ourselves that doing business in the UK is largely free from corruption and fraud, but it is a myth. It is as bad here as anywhere in southern Europe."
He added: "Although fraud against businesses is a rapidly growing crime, the reality is that most business victims do not see the prosecution of fraudsters as a priority. They are much more concerned with making sure the fraud cannot happen again and recovering the stolen money."
Bevan said lenders were particularly vulnerable to this fraud as criminals falsely inflated property and other assets as security to borrow bigger sums of money. Once the loans were given the fraudster would vanish. He identified private equity and venture capital firms as the most open to attack.
The fraud expert also argued that limited police resources were more concerned with individual fraud cases than corporate ones and this too, could have contributed to the numbers of businesses failing to report cases of fraud.
"The police have to make difficult decisions on which crimes to investigate. Business fraud is not top of their list," he said.