Media Centre
Fraud Updates
PCB News
Fraud Updates 2004
18 October
It has recently been reported that fraud costs UK businesses £40 billion a year. It is estimated that companies spend £8 billion a year on fraud prevention and security measures in addition to the £32 billion a year lost to fraud. However, it is believed that many companies fail to report fraud for fear of having their reputations' damaged and, therefore, the real figure may be substantially higher than £40 billion.
The three main areas of fraud are embezzlement, cheque fraud and money laundering. However, it is estimated that identity theft costs £1bn per year with many fraudsters attacking companies in an attempt to steal customer information or damage the victim's reputation. Larger companies are most vulnerable to fraud, which can cost them up to 5% of their turnover.
The victims of fraud should always consider using civil proceedings as a method of recovering stolen assets. It is possible to use court orders to trace stolen assets through different bank accounts and even into assets purchased using the money. Alternatively, if the fraudsters can be identified, it is possible to freeze their worldwide assets and require them to disclose details of any further assets.
7 October
It has recently been reported that Sumitomo, one of Japans leading companies, will today commence its claim against Credit Lyonnais Rouse for its role in a massive copper trading fraud. The claim arises from the activities of "rogue trader" Yasuo Hamanaka, Sumitomo's former head of copper trading, who lost the conglomerate $2.6bn.
Sumitomo alleges that Credit Lyonnais Rouse dishonestly assisted Hamanaka in a series of transactions with which served no commercial purpose and often were "wash" trades which allowed the rogue trader to book a profit. Further, Sumitomo allege that CLR knew, or should have known, that millions of dollars of Hamanaka's copper trades were unauthorised. CLR, in its defence, claims that Sumitomo was informed of all the trades and failed to properly supervise Hamanaka.
When considering litigation, it is important to look at all possible targets. Directors may be accountable for failing to carry out their duties with sufficient diligence. Auditors may be liable for failing to check the accounts properly. It may also be possible to recover from regulators if they commit a misfeasance in public office.
| November 2004 | September 2004 |