Austerity leads to fraud ‘boom time’

Accounting giant KPMG revealed that British fraud surged in 2011, up 150 per cent to £3.5 billion – boosted by rising incidents of management fraud.

The KPMG ‘Fraud Barometer’ reported an all-time high for the UK with the firm attributing the dodgy dealings to continued tough economic conditions. £2.5 billion of the fraud occurred in the second half of 2011.

"2011 was an extraordinary year for fraudsters – as demonstrated by the record losses through large-scale cases of fraud which dominated the headlines," said KPMG forensic partner Hitesh Patel.

Patel said that economic uncertainty was a "double edged sword" and had caused companies and government to root out fraud but at the same time individuals were motivated to perpetuate more fraud.

KPMG also warned that fraud perpetuated by professional criminals was also on the rise. Many such acts were enabled via online mechanisms such as phishing and online banking fraud.

"Sadly due to the current economic circumstances the forecast is that the situation will get worse before it gets better," Patel added.