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Fraud Updates
PCB News
Fraud Updates 2004
27 January
According to the KPMG fraud barometer published yesterday, the number of large fraud cases almost doubled last year. In 2003 there were 153 cases involving frauds of over £100,000 (up from 83 in 2002). However, the total value of these frauds was only £374m, almost half of the 2002 level (£716m). This drop was due to several large VAT frauds which came to trial in 2002 distorting the figures for that year.
Other statistics from the KPMG barometer showed that London had the greatest number of frauds (40) followed by the Midlands (30) and the North West (22). Additionally, frauds perpetrated by management cost four times as much as those perpetrated by employees.
Victims of fraud always have the option of using the civil courts in order to recover their losses. It is possible to obtain disclosure and search orders to allow the victim to investigate the fraud. Anti-tip off orders may also be sought to prevent the fraudster being alerted whilst an investigation is carried out. It is also possible to get freezing orders to secure the assets of the fraudster until court proceedings can be commenced.
14 January
Yesterday, the trial between the liquidators of the Bank of Credit & Commerce International (BCCI) and the Bank of England commenced. BCCI's liquidators are seeking £850 million in damages on the basis that the Bank of England failed to properly regulate the bank.
The Bank of England is immune to most causes of action including negligence but not from a claim founded on misfeasance in public office. To succeed, the liquidators will have to demonstrate that the Bank of England acted or omitted to act in the knowledge of, or with reckless indifference to, the fact that the act or omission would probably injure BCCI.
If an individual or organisation is in a position to prevent or stop a fraud but fails to do so, they may themselves be liable for the losses suffered by the victim. Possible targets include lawyers and accountants who help set up fraudulent schemes, auditors who fail to detect fraud and banks who help to dispose of the proceeds. If the liquidators succeed in their claim against the Bank of England, it may encourage other similar claims against regulators such as a claim by disgruntled Railtrack shareholders.
| March 2004 | December 2003 |