As pressure grows on managers to deliver sales and on listed companies to deliver profits, offences of tax evasion and false accounting are booming.
A snapshot survey by the Independent on Sunday, based on the latest figures from the DTI, shows a big increase in the number of directors banned or disqualified. In the year ending June 1998 1,275 directors were banned, an increase of 13 per cent on the same period last year.
The DTI credits the rise to a concerted crackdown on "phoenix" companies - businesses which fold without paying debts, only to emerge days later trading under a similar name, from the same premises, with the same directors. The worst-offending sectors are construction, labour supply and the clothing industry. Nearly four out of every 10 disqualifications occur in London and the South-east.
But another explanation is that harsher economic times are putting more pressure on businesses. There were 3,346 company insolvencies in the second quarter of 1998, a 4.7 per cent increase on the previous quarter and a 6.4 per cent increase on the same period a year ago.
The DTI's special Company Investigations Unit has around 100 agents, tracking the complex paper trail left by fraudsters. The Inland Revenue runs a similar unit, the Special Compliance Office, which is charged with detecting and investigating suspected serious tax fraud, evasion and non-compliance. The SCO has identified pounds 457m for recovery in the latest tax year - an increase of 29 per cent on the previous year.
Taken together, according to accountants KPMG, these factors point to a worrying picture of corporate crime.
Earlier this week, Allied Carpets admitted that accounting irregularities for the past five years had resulted in a pounds 3m charge to profits. Early booking of carpet sales in almost all its 258 stores had distorted the company's figures.
It is one of the most common irregularities, according to Phil Haberman, a forensic accounting partner with KPMG.
Mr Haberman, whose unit was contracted by the Serious Fraud Office in the Polly Peck and Maxwell fraud cases, warned companies to be wary as the widely expected recession bites.
"There is a temptation to manipulate figures to retain the confidence of the markets. The commonest way is to manipulate sales figures or an order book or simply avoid logging costs to give a healthier impression of a company," he said.
"When you have a recession you have stagnant stock which decreases in value. One way to conceal it is to 'lose' the stock by moving it from depot to depot or setting up outside companies to 'buy' it from you on paper and 'sell' it back under different terminology."
The Confederation of British Industry acknowledged the increased pressure on businesses, but said it had "no evidence to suggest that this leads to changed practices or to the bending of any rules."Reuse content