CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. UK Businesses 'Losing Out Due To Corrupt Executives'

UK Businesses 'Losing Out Due To Corrupt Executives'

by Robin Pilgrim, LawAndTax-News.com, London

22 November 2005


According to a report released by law firm Mishcon de Reya entitled 'Protecting Corporate Britain From Fraud', corporate fraud and corruption is costing the UK's businesses in the region of £72 billion per year.

In a statement released to accompany the report, the law firm explained that:

"In the last fiscal year, the Serious Fraud Office investigated cases estimated to have cost corporate Britain more than £2 billion. More worryingly, the Association of Certified Fraud Examiners estimates that companies lose 6% of their annual revenue to fraud. Put in terms of the UK's GDP, that is equivalent to undetected and unreported fraud costing businesses over £72 billion every year."

It continued:

"Major corporate collapses such as Parmalat, WorldCom, Enron, BCCI and Barings, arising out of a range of circumstances, should have been a wake up call for Corporate Britain to recognise that it is facing a serious risk of major fraud. When you combine this with the introduction of the most comprehensive worldwide anti-money laundering and corporate governance regime, you would expect corporate Britain to be fully equipped to protect itself."

"However, the introduction and strengthening of the regulatory, money laundering and corporate governance framework may have unintentionally increased the risk that corporate Britain faces from fraud. Why? Because the in-house resources that a corporation has available to prevent, detect and investigate fraud, namely the internal audit function, is fast becoming so overstretched with the volume and complexity of financial auditing and reporting requirements, that it does not have enough time or budget to deal effectively with the fraud risk."

Key findings contained in the report included:

  • Despite the fact that 83% of companies questioned stated that they had 'good to excellent' understanding of the value of information gathering, only half of them actually used external investigators.
  • Nearly 90% of companies that do not use external investigators felt that there was 'no need' to do so.
  • Over 90% of the companies that use external investigators reported a reasonable or good return on their investment.

In conclusion, the law firm observed that:

"Corporate Britain is under constant pressure to deliver value to shareholders and investors, but also to act as a good corporate citizen and implement the requisite safeguards and financial controls. This balance is difficult to achieve, but it can be done if corporate Britain is willing to change its perceptions of, and habits in the way it uses, investigative Britain."

"In order to change, corporate Britain first needs to understand the benefits that it will derive from collaborating with investigative Britain. Investigative Britain needs to make a huge leap in the way in which it demonstrates how it can add value to the corporate bottom line. Only then will investigative Britain take its rightful place at the table of professional corporate advisers, in the same way that lawyers and accountants have done over the last fifty years."


To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »