Photos taken during the 2011 MFF conference.
The Midlands Fraud Forum (MFF) aims to promote awareness of fraud
issues and educate everyone on effective fraud prevention measures.
Fraud occurs in both private and public sectors and will continue to escalate until
we join forces and combat it together.
Across the UK it is estimated that fraud costs the
UK over £73m a year.
Fraud is not traditionally seen as being a sexy subject and, due to the
culture of British business, has tended to be hidden behind a veil of secrecy.
These factors have added to the inhibition of fraud prevention; the nature of fraud
means many people find it difficult to talk about as it just feels like we are
highlighting our own weaknesses.
Effective fraud prevention requires us to be open about our experiences and
share our knowledge. Recent changes in the Government's approach
to fraud have started a culture change, particularly with regards to private individuals
but much work is still required in the corporate sector. In common with the
other fraud fora across the country, a key aim of this website is to encourage
and participate in this knowledge sharing.
EFFECTIVE SANCTIONING OF FRAUDSTERS
In February this year, Midlands Fraud Forum co-sponsored a research project with
Eversheds and PKF into the effective sanctioning of fraudsters. The project was
carried out by the Centre for Counter Fraud Studies at the University of Portsmouth,
and below are the research findings and recommendations:
1. Significant reform is
required to the way in which fraudsters are sanctioned. The 2012 report “Fraud and
Punishment – enhancing deterrence through more effective sanctions” sponsored by
the Midlands Fraud Forum, Eversheds and PKF recommends that industry sectors should
consider funding their own body to investigate and sanction fraudsters.
2. The suggestion
is that Government provides some funding for this body of a few million pounds in
order to get it off the ground. The possibility of member subscriptions and charges
for services are also recommended for consideration. Whether the Government can
be persuaded to do this in the age of austerity is highly debateable. There may
be a pressing economic reason for doing so, however. And that is the scale of the
3. Fraud has become an escalating problem for the commercial world.
The National Fraud Authority’s annual Fraud indicator estimated £73 billion is lost
to fraud annually which, if accurate, sets fraud as the most expensive crime to
UK business. In particular there is an escalation of “cybercrime” (the use of the
internet and other technology to perpetrate age-old deceptions) and despite Government
reviews and strategies in recent years, the problem seems to be spreading unchecked.
One problem may be that organisations do not accurately measure their loss to fraud.
The Retail sector however has worked hard to examine the scale of the problem.
The research is unique and warmly welcomed as there has been a lack of academic
research in this area. The findings of this research accordingly demand close attention.
The evidence suggests that when it comes to pursuit and punishment of offenders,
the criminal system is failing, there is insufficient recourse to civil law and
that private prosecutions may be under used.
5. The use of “parallel sanctions”
(what might colloquially be described as throwing the book at the perpetrator) is
advocated by the research. This involves HR disciplinary processes, civil litigation,
regulatory sanctions and criminal prosecutions operating concurrently.
6. The most
startling of the research’s conclusions is that as little as 1.5% of fraud is reported
to the criminal justice system and only 0.4% results in any kind of sanction within
that system. It follows that fraud in many areas is effectively becoming decriminalised.
The length of time it takes fraud cases to progress through the courts (with delay
being the enemy of justice) means that many fraudsters get away with it.
research also reveals the “postcode lottery,” with significant variations in the
likely success in pursuing a case depending on the geographical location of the
victim. At the criminal investigation level, this is inextricably linked to resources
and the need for further education and training in what has become a specialist
area. Counter Fraud professionals are emerging as a new profession much in the way
that IT professionals did several years ago and chief information officers are now.
8. The Police were so slow to respond that by the time they came to requisition
the CCTV it had been overwritten. The CCTV owners did not put it on one side, it
is true but their view was that without Police say-so they were not obliged to act
on the instructions of a third party.
9. Cases like this demonstrate that the system
is seriously broken. A new approach is required, without which fraud and corruption
is going to drag down economic recovery for the foreseeable future