Reported levels of employee fraud in UK business are just the tip of the iceberg as new research estimates that the cost of fraud to listed companies alone amounts to some £2bn a year.
Research published by risk management firm Protiviti UK and Professor Martin Gill of security consultancy Perpetuity Group provides a startling glimpse into the huge amount of money that UK plc's lose every year to fraudsters.
Based on a series of in-depth interviews with currently serving convicted fraudsters, it reveals that vast sums are being siphoned from companies, with the minimum amount stolen being £65,000 and the maximum an astronomical £25 million.
"It is common knowledge that most incidences of fraud go unreported, as most companies choose to deal with the problem internally," said Mike Adlem, the MD of Protiviti UK, who has been investigating financial crime throughout the world for over 20 years.
"Add to this the phenomenal amount of fraud that goes unnoticed, and you soon realise that any figures we have on the 'cost of employee fraud' are just the tip of the iceberg.
"Considering that the minimum amount stolen by our interviewees was £65k and the maximum £25 million, a conservative estimate of the cost of employee fraud to UK listed companies alone would be £2 billion."
To put this figure into context, listed companies make up only one per cent of UK businesses, Adlem added.
The research highlights numerous motives for committing the offences, ranging from boredom to temporary insanity, but consistently recurring themes were disgruntled employees exercising greed and in some cases debt reduction.
"I was in massive debt and it started from there. I had taken loads out and once I had paid my loans off I had less than £100. So I had to do something," said one fraudster.
Others see fraud as the answer to financial problems, but, as is often the case, continue to steal long after his debts had been cleared.
"I was living the high life. I had become a high net worth individual and I was keeping up with the lifestyleÖthe three words that sum it up are lies, pride and greed," said another.
The research also exposes the staggering ease with which the perpetrators carried out their embezzlement.
"George" stole approximately £250,000 by issuing and signing-off spurious invoices for up to £75,000 and paying them directly into his private savings account.
In his view it was, "extremely easy from a practical pointÖwe did such vast volumes that no one would have questioned me."
One of the risk factors in financial crime is the role of audit. When interviewees were asked how they perceived audit, few considered it a concern. William, convicted of conspiring to defraud his company of £25 million, dismisses the effectiveness of the auditors as having "no experience of business.
"They're just people who know about figures, but not business practice."
Eric, a property developer sentenced to seven years, was another not worried by the auditors:
"Had they been better at their job I would have been in trouble. What I was doing was simple, but the lack of process enabled me to do what I did, the absence if systems, the lack of attention to detail, the lack of knowledge and auditing in accounting."
Mike Adlem said that fraud was made easier because only half the UK's top 350 companies had put in place extra anti-fraud measures which could prevent the majority of fraud from taking place.
Internal controls and effective internal audit are by far the most cost-effective approach when dealing with the problem of white collar crime, he pointed out.