Fraud rose dramatically to 'record levels' levels in the UK last year, according to industry watcher BDO Stoy Hayward.
According to the firm's annual FraudTrack report, the value of total reported fraud in Britain more than doubled, from £331m in 2003 to £756m in 2004, although the number of cases involving fraud worth over £50,000 increased only modestly, from 211 to 229.
Andrew Durant, fraud investigation specialist at BDO and author of FraudTrack, said: "As the UK economy goes through a positive period, fraud increases along with it. The chances of getting caught are low, and the chance of going to jail is even lower.
"A typical sentence for those committing fraud of more than £1m is 3.3 years. Compare that with the US, where large-scale fraud can lead to sentences of up to 20 years," he said.
Durant said that the biggest threat to a company was from the inside rather than external pressure. "Employees have the knowledge, they can access funds and sensitive information, and they know the weaknesses of a company," he explained.
Keith Warburton, executive director of the PC Association, said IT firms need to invest time and money in employees to generate more company loyalty. "There is massive mobility of labour in our industry. If there were more professional skills I believe the industry would be more solid, because investment means loyalty and in turn that means an employee will stay with their company for longer. However, I don't think there is the money, or will, to invest right now," he said.
Eddie Pacey, director of credit at Bell Microproducts Europe, said: "The opportunity for internal fraud in the UK is clearly there because not enough firms have an internal risk management process in place.
"Our industry is much more susceptible than most because of the turnaround in people and the incestuous nature of the sector. People move around from reseller to reseller and distributor to distributor, and there is not enough screening taking place," he said.
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