Fraud Breaks GBP1bn Barrier in 6 Months

LONDON, July 19, 2010 - The growth of fraud in the UK continues unabated according to BDO LLP's
six monthly update on reported fraud. For the first six months of this year
fraud losses rocketed to GBP1.06bn and eclipsed previous half-year figures,
and were almost the same as for the whole of 2008.

This is the first time fraud levels have soared above the GBPbillion
barrier during the interim period in the seven years BDO has been conducting
its survey. The average value of a single fraud has increased to almost
GBP6m, from GBP5m last year.

It shows that fraud is on the increase and BDO fully expects this to be
another bumper year. In particular, BDO expects more enforcement action by
regulators in the financial services arena with enforcement action for
insider dealing also becoming more prevalent.

Simon Bevan, Head of the Fraud Services Unit at BDO, says: "In the past
we have seen a focus on procurement type frauds - that is public and private
sector organizations paying too much for goods and services. However we are
now seeing more 'revenue dilution fraud' - where management commits fraud by
either setting up 'companies within companies' or diverting lucrative
contracts away from the company to third party accomplices. Linked to this
is an increase in insider dealing."

Bevan predicts that competition between regulators to 'act tough'. "We
have a combination of political pressure and the understandable desire, in a
downturn, for the public sector and corporates to be seen to have a zero
tolerance policy."

From these interim results, BDO predicts that the average fraud will top
GBP7m by the end of 2010.

    Sectors and regions most at risk:

    - The finance and insurance sector remains a dominant fraud
      risk with 49% of all fraud in this sector
    - Mortgage fraud accounts for a fifth of all reported fraud and
      36% of fraud in the finance sector
    - Third party customers and suppliers are responsible for 17%
      of all reported fraud on businesses whilst internally management
      cooking the books have also caused 16% of reported fraud London and
      the South East continue to be the hotbed of fraud activity with 71%
      of fraud but Wales has also experienced 15% of fraud in this interim
      period compared to only 2% last year.

Full release at:
www.kelsopr.com/fraud-breaks-1bn-barrier-in-6-months

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