BUSINESS fraud in Yorkshire and the North-East has rocketed by a staggering 1,900 per cent over last year, depriving businesses and individuals of almost £100m.
Research by audit, accounting and business services firm BDO Stoy Hayward's revealed fraud rising to £95m in the last six months of 2009 compared to £5m for the same period in 2008.
In nearly three quarters of cases, greed and the need for a lavish lifestyle were stated as the reasons for the fraudsters committing the crimes.
The region's financial and insurance sector accounted for the highest proportion of all cases. In terms of money lost, the real estate sector was hardest hit.
Types of fraud vary. Procurement fraud is typically found in an organisation's purchasing operation with a fraudulent employee perhaps working with an outside accomplice to defraud the employer through bogus or inflated invoices for goods and services.
Large-scale frauds often taken place in relation to sizeable purchases of information technology or other fixed assets.
It can also include the corruption of management with purchasing authority by suppliers to encourage orders being placed with a particular business. The general public were also victims of fraudsters – to the tune of £3.5m with a number of people being swindled out of their life savings.
Simon Bevan, the Leeds-based head of BDO Stoy Hayward's national fraud team, said: "It comes as no surprise that fraud is rocketing but I predict we will see overall fraud in the UK hit £3 billion per annum. There is a whole wave of commercial lending fraud that is yet to be revealed by UK and overseas banks.
"It is frightening that the predicted level of £3 billion is only representative of those cases that reach the courts.
"In our experience many cases are never reported. The level of actual fraud is incalculable but is likely to be in the double digit billions."
Looking specifically at Yorkshire and the North-East, Mr Bevan said: "This region has a number of diverse industry sectors from financial powerhouses in Leeds to manufacturing plants in other major towns and cities. Past investment has seen growth in Yorkshire and the North-East and fraudsters will always be attracted to the smell of money."
He warned businesses to be on their guard.
"Recessions bring big problems for business leaders and fraudsters will do their best to take advantage of this.
"Firms should ensure that the issue of fraud is not forgotten – a large fraud can damage all the good work undertaken to survive the current economic climate."
