Banks are soft on fraud, says City police chief

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ONE OF Britain's most senior police chiefs attacked banks and financial institutions yesterday for "paying off" or ignoring company bosses and employees caught committing fraud rather than risking high- profile court cases.

Perry Nove, Commissioner of the City of London Police, blamed criminal activity among financial workers partly on their employers' soft approach to fraud. Mr Nove also argued that much of the cheating and corruption in banks, building societies and insurance firms was linked to lack of job security. Workers who had only short-term contracts felt they had nothing to lose, he said.

Speaking at an international crime conference in London, he said that fraud of all kinds is estimated to cost at least pounds 11bn a year - pounds 11 per household every week. He said: "One problem is the more that criminality is investigated behind closed doors, perhaps leading to pay-offs and dismissals of dishonest and corrupt staff, the more attractive it becomes to others who would never have contemplated cheating their employer by turning to fraud.

"This factor, when linked to the short-term nature of employment for those working in the financial sector, weakens the resolve to remain honest and can lead to an attitude whereby the organisation is seen as `fair game'.

"The concept of absolute loyalty to one's employer has become a thing of the past and even staff of long standing question their moral obligation to an organisation that is likely to dispense with their services at short notice."

Mr Nove's force investigates fraud and corruption among the financial institutions that make up the "square mile" in central London.

Fraud squad officers are privately, and increasingly publicly, infuriated with financial institutions' unwillingness to report illegal activities, preferring to hush them up because they fear bad publicity may harm their reputations and profits.