An alleged rogue trading incident perpetrated in the London offices pushed the level of fraud in the UK to an all-time high.
The total amount of fraud in 2011 was more than £3.5bn, with the second half of the year contributing £2.5bn, according to recent research by KPMG’s Fraud Barometer,(KPMG is a global network of professional firms providing Audit, Tax, Advisory services.) which has studied fraud cases every year since 1987. Even without the trades that wiped at least £1.3bn off UBS’s books in September, the second half of 2011 would still have seen the largest amount of fraud recorded in KPMG’s survey.
The findings come the same day as Kweku Adoboli, a former trader on UBS’s London-based Delta One desk in its investment banking division, is scheduled to enter a plea to two counts of fraud and to two of false accounting.
KPMG’s report singled out a “rogue trader case” worth £1.3bn without naming the bank or individual.“2011 was an extraordinary year for fraudsters – as demonstrated by the record losses through large-scale cases of fraud which dominated the headlines. The economic uncertainty has been the double-edged sword behind these numbers,” said Hitesh Patel, a forensic partner at KPMG.
“The pressures on individuals as a result of the downturn continues to act as a catalyst for more fraud being perpetrated. These figures represent the thin edge of a much bigger wedge.”
KPMG’s findings chime with those of the government. A report published last week by the UK’s Fraud Prevention Service showed a 9 per cent increase in overall fraud in the UK during 2011, compared with the previous year. Identity fraud, which accounts for just under half of all fraud cases, had increased by 10 per cent since 2010, researchers found. The report also noted a 13 per cent rise in fraud of an account or financial policy which was legitimately obtained but later used without the owner’s permission.
While the value of fraud has increased in 2011, there have been fewer cases coming to court, according to KPMG’s research, which studies cases in court with charges above £100,000.
The UK’s Serious Fraud Office said in a statement that it was prosecuting more cases that involved increasingly more defendants. A spokesman said that the discrepancy between the SFO and KPMG’s statistics could be down to the fact that the agency’s cases take years to prepare.
