Commercial businesses were victims of fraud to the tune of £95m in the first half of the year, with SME businesses particularly vulnerable. Most often they were at the mercy of internal threats from trusted staff exploiting positions of authority, but the two biggest cases arose from external threats:
In one case, a charlatan posed as a billionaire banker to the Pope to help a gang swindle a shipping firm out of £73m. The firm had been looking to increase its capital to fund the construction of a new ship. The 49 year old duped them into handing over the funds by claiming he could get them a 1,200% return using a secretive Papal trading platform, but instead spent their millions living the high life.
In the other case, an advertising scam saw thousands of small businesses across the country tricked into paying for adverts in a magazine that never materialised. It was estimated that up to 15,000 victims fell prey to the sales team, who falsely claimed to be representing the police, fire or ambulance services to create trust and respectability. With threats of legal action if invoices were not paid, some desperate businesses sold assets or defaulted on loans to pay off the scammers.
“While economic conditions remain soft, it is unsurprising that commercial enterprises and investors are looking for new ways of making money, often dealing with people they have not encountered before. For commercial businesses, two of the biggest frauds recorded this year progressed so far because the fraudsters were able to create a reputational illusion, convincing victim companies to hand over large amounts of money – often sums that materially impacted their ability to operate. As the environment for business continues to be tight and competitive, fraudsters are able to hide easily among genuine businesses.”
Hitesh N Patel, UK Forensic Partner at KPMG