Corruption in UK set to rise in 2010

Corruption and bribery cases in the UK reached record-highs in 2009, and this trend is expected to continue, according to accounting firm KPMG.

Initial figures from the firm’s annual Fraud Barometer, which has been published for 21 years consecutively, show a fraud rate in the first six months of 2009 that was the highest in the report’s history, according to London newspaper The Guardian.
In all, there were 160 cases of serious fraud in the UK, costing £636 million.

Hitesh Patel, a partner at KPMG Forensic, said the near-record rate of fraud continued into the second half of 2009, and is expected to stay high in the next 12 months.

He said: “Overall, I would expect incidents of fraud to increase and the picture is likely to get worse before it gets better. The question is how big will the fraud spike be?” Mr Patel added that fraud has a so-called “long-tail”, which means it usually takes several years before fraud is detected, investigated, and brought to court – if ever. This means that the full impact of the credit crunch and the ensuing global financial crisis on fraud will continue to be felt in the years ahead.

“As companies look to increase top-line growth and reduce operational costs in the current stressed economic environment, supply chain and accounting related frauds are likely to be an issue in 2010. The drive to secure new business means that bribery and corruption offenses by employees may become an issue for companies,” Mr Patel said.

He added that this will become more important as the UK implements a draft bribery bill, which potentially makes companies liable if they are found to be negligent in preventing bribery and corruption. The bill is expected to become law in the UK before the end of the year.

The firm’s barometer tracks fraud cases with charges in excess of £100,000.