Criminals scooped £40bn off UK businesses last year, says survey

Economic crime cost UK businesses more than £40 billion last year, equivalent to £100 million a day, and the problem is getting worse, according to a report launched today.

The report by business advisers and accountants, RSM Robson Rhodes, found that UK companies lost £32 billion in 2003 through fraud, embezzlement, corruption and money laundering, and spent a further £8 billion seeking to combat the problem.

FTSE 100 companies alone lost an estimated £500 million and all listed companies lost £3 billion, the company said.

The true cost of economic crime could be even higher as the report only highlights known losses to businesses. It is also a growing problem – six out of ten respondents believe the threat of economic crime to their business will worsen over the next three years.

Robson Rhodes said that nearly one-in-three businesses only discuss economic crime once a year or less, indicating that UK boards are "not doing enough to tackle a potential ‘business killer’".

However, the study found that boards were beginning to acknowledge the severity of economic crime, with 81% of respondents believing that it could impact on the company’s share price and 78% stating that it could have a serious impact on brand image.

However, although 93% agree that the board has ultimate responsibility, ‘corporate denial’ is rife. Only 57% of UK boards believe that they have an understanding of the financial cost of economic crime.

Bill Cleghorn, forensic partner at RSM Robson Rhodes, said that the £40 billion estimated cost to business was "staggering and could be just the tip of the iceberg".

“Businesses need to take the risks posed more seriously. Whilst there is no set time for how long boards should spend tackling the issue, they need to research the level of economic crime in their industry sector. They then need to put in place effective systems and controls to prevent it, identify material losses and take action to recover those losses," he said.

The survey, endorsed by the Home Office and the Fraud Advisory Panel and supported by the CBI, questioned over 100 businesses with a combined turnover exceeding £500 billion (including 24 FTSE 100 companies) about 50 aspects of economic crime.

(gmcg/mb)