The warning came from George Staple, former head of the Serious Fraud Office, at the official launch of a body designed to tackle the problem by drawing on expertise in a variety of sectors. The Fraud Advisory Panel has been established under the auspices of the Institute of Chartered Accountants in England and Wales, but is being supported by several public- sector organisations, including the Customs & Excise, the Department of Social Security, the National Audit Office and the City of London and Metropolitan police forces.
Ian McCartney, a minister at the Department of Trade and Industry, welcomed the move, saying he hoped it would play an "important part in developing greater awareness of business fraud and the means of combating it".
The initiative was introduced by Gerry Acher, head of audit at accountants KPMG and chairman of the institute's audit faculty. He likened the move to the institute's prime role in setting up the Cadbury Committee on corporate governance in the wake of the spate of business failures that followed the late 1980s boom.
Many of these collapses, such as Polly Peck, Barlow Clowes and Bank of Credit and Commerce International, were followed by high-profile fraud trials. And Mr Staple and Mr Acher believe that experience suggests that if the current buoyant economic conditions are followed by another recession a similar pattern could follow - unless there is a change in the business culture.
The panel, which has already sat twice, has established three working parties charged with meeting the prime objective of achieving that change by reducing the incidence and impact of business fraud. The first, to be chaired by Anthony Bingham, a partner at accountants Coopers & Lybrand and a member of the audit faculty, will gather information on fraud with the aim of creating a much more detailed picture of the problem. The second, headed by Mike Hoare, a former Metropolitan Police officer who is chairman of the Risk & Security management Forum, will investigate methods of prevention, provide advice in this area and make people more aware of the problem. The third, under Howard Page QC, will look at the effectiveness of existing methods of investigation and prosecution and seek to improve the speed of conviction.
This last area is of particular interest to Mr Staple who, since his return to the leading law firm Clifford Chance following his term at the SFO, has spoken of the need for a general offence of fraud if white- collar criminals are going to be caught and deterred. At present, prosecutors have to rely on alleged offences falling within the Theft Act, which can make trials extremely complex and convictions hard to secure.