UK business fraud at record levels

LONDON, Jan 2 (Reuters) Business fraud reached record levels in Britain last year, passing the 1 billion pound mark for the first time, a report said today.

The level of reported business fraud increased by 40 percent to 1.37 billion pounds, up from just under 1 billion in 2005, according to the annual FraudTrack report from accountants BDO Stoy Hayward.

The actual cost to businesses is estimated to be much higher -- at least 5 billion pounds -- because only 15 per cent of businesses reported frauds to the police, the report said.

Much of the business fraud was based around high value VAT fraud, also known as ''carousel'' fraud.

''Although fraud against businesses is a rapidly growing crime, the reality is that most business victims do not see the prosecution of fraudsters as a priority - under a third of financial directors surveyed saw this as one of their top priorities if they discovered a fraud,'' said Simon Bevan, the national head of BDO Stoy Hayward's fraud services team.

Bevan said that pursuing a fraud case through the criminal courts was very time consuming and did not normally result in recovery of financial losses.

The Fraudtrack report also found that there had been a consistent fall in sentence length for fraudsters since 2003, particularly for frauds worth less than 1 million pounds.

But there had been a toughening of sentences for larger frauds worth more than 1 million pounds.

The majority (82 per cent) of frauds, including virtually all frauds above 1 million pounds, were committed by men.

Reuters KR DB2329