The value of major Scottish fraud cases increased by more than 11% last year, a new study by professional services firm KPMG has found.
Its bi-annual fraud barometer today reveals how 15 cases with a value of six figures or more were brought to court in Scotland last year, with a total value of £6.8 million.
Around 40% of prosecutions involved employees defrauding their own organisations and, of the £2.7m total, more than £700,000 of fraud was alleged to have been committed by company managers.
Cases involving charges related to fraudulent VAT accounting amounted to some £2.3m, and formed part of what KPMG called an “opportunist” pattern of offending.
While career fraudsters are at the cutting edge of technology, often using technology to attack banks, the majority of Scottish fraud cases involved employees using privileged access to embezzle funds from their workplaces.
The UK as a whole saw a much higher volume of fraud cases, but with case values at a much lower level than in previous years.
KPMG head of forensic accounting Ken Milliken said opportunities for fraudsters remained, despite the increasingly thorough protections which have been put in place by businesses.
“While it is certainly the case that we have seen professional criminals using very clever high-tech frauds to attack banks, businesses and local authorities, we have also seen some of the biggest frauds committed by insiders,” he said.
“As old forms of transactions, such as cheques, are phased out, organisations are focusing on developing sophisticated lines of defence.
“While these look effective in putting-off many fraudsters, it would appear there remain significant opportunities for opportunists to defraud organisations from within.”
In one strikingly simple case identified by the study, a local government employee processed cheques for legitimate payees using disappearing ink.
The employee secured the signatures of senior management for cheques reaching a total value of £162,000 and waited for the ‘payee’ details to disappear before substituting them with her own name.
Another saw fraudsters post fake job adverts for a major London department store, before using Trojan computer malware hidden in application packs to copy bank details from applicants’ computers.
The barometer also highlighted the first case prosecuted under the UK’s new Bribery Act.
In it, three senior executives were charged with making and accepting financial advantages in a case with a tag of around £23m.
“The UK has seen its first prosecution relating to individuals undertaking commercial activities under the new anti-bribery legislation, and with it being widely known that other cases are in development, fraudsters may begin to fear the ramifications of being caught,” said Mr Milliken.
“If guilty verdicts are returned and heavy punitive measures imposed, perhaps we will start to see people thinking twice before attempting to corrupt others in the pursuit of unfair advantage.”