Surge in fraud 'may only be tip of iceberg'

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The Independent Online
LARGE frauds soared more than pounds 100m to pounds 468m last year, triple the amount seen in 1987, according to an analysis by KPMG Peat Marwick, the accountants.

But the amount disclosed by formal charges of fraud in the courts may be the tip of an iceberg 10 times bigger, 'because 90 per cent of frauds never reach the surface', the firm believes. This means that the total value of frauds involving more than pounds 100,000 over the five years to 1992 could be much higher than the pounds 1.605bn recorded by KPMG.

The Maxwell pension fund case, which involved pounds 140m, more than accounted for the increase in the cash value of alleged frauds last year. But the number of cases also shot up from 45 in 1987 to 69 in 1991 and 86 in 1992.

A recent trend is an increase in false insurance claims, where five cases including three convictions were reported in the last four months of the year. This is more than the total of insurance cases in the rest of the five-year period.

Last year, financial frauds, including the Maxwell allegations, accounted for half of the cases recorded.

Of the 1992 cases, 21 related to theft of clients' funds. Philip Haberman, a KPMG fraud specialist, said: 'Solicitors with practising certificates facing spiralling levies from the Law Society's compensation funds will not be surprised that these cases included nine solicitors alleged to have stolen almost pounds 8m.'

Over the five years, 77 of the 349 recorded cases were frauds against members of the public, including investors. But only two involved pension funds.

KPMG's survey is based on reports of charges where more than pounds 100,000 is involved. It counts the amounts in the charges, not the total lost. Acquittals are deducted from the totals.

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