The Times - UK (2022-05-27)

42 V2 Friday May 27 2022 | the times

Business

Bank’s Covid fraud record

condemned by ex-minister

George Greenwood, James Hurley

The government’s former counter-

fraud minister has launched an unprec-

edented attack on a bank for its

allegedly poor performance at prevent-

ing pandemic fraud.

Lord Agnew of Oulton, who resigned

in January over the government’s

“woeful” oversight of the £47 billion

bounceback loan scheme, singled out

Starling, the online bank, claiming it

had “acted against the government and

taxpayers’ interests” and was one of the

worst banks for preventing fraud and

flagging up suspicions.

In a speech at Westminster Abbey,

Agnew, 61, claimed that Starling had

used the scheme as a “cost-free market-

ing exercise” while not taking its anti-

fraud responsibilities seriously enough.

He alleged that the lender, which is

led by the former Royal Bank of Scot-

land banker Anne Boden, had been

“one of the worst” performers on the

scheme when it came to checking

borrowers’ turnover claims — which

formed the basis of how much they

could borrow. “They took this as a god-

sent opportunity to swell their balance

sheet by a factor of 50 times in barely

less than a year with no risk to them-

selves and 100 per cent risk to the tax-

payer,” Agnew claimed.

Last night, Boden said she was

“shocked” by the comments. “We have

been one of the most active and effec-

tive banks fighting fraud,” she said.

The scheme saw banks provide loans

of up to £50,000 that were under-

written by the taxpayer. Fraud losses

are expected to be about £4 billion.

Boden, 62, said: “The comments

about not checking the turnover of

businesses or submitting suspicious ac-

tivity reports are absolutely and utterly

wrong and I must ask him to withdraw

the statement.”

Stock markets across the world

remain volatile following

Russia’s invasion of Ukraine.

Oil and gas prices have been

spiralling, while British

companies are scrambling to

cope with the effects of soaring

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Fraudsters hit

two thirds of

British firms

Jonathan Ames Legal Editor

Two thirds of British companies have

been targeted by fraudsters in the past

two years with cyberattacks the most

common crime.

A survey of big corporations found

that 64 per cent of them had been

affected by fraud and other economic

crimes during that time — significantly

above the global average and about a

10 per cent increase on the domestic

figure from two years ago. The average

cost to those companies ranged from

£800,000 to nearly £4 million.

The global economic survey, con-

ducted by researchers at PwC, the

accountancy firm, questioned nearly

1,300 companies, including more than

100 in Britain, and found that 46 per

cent had been the victims of fraud and

economic crime.

Researchers found that reports of

fraud against UK companies had

increased: in the last survey in 2020,

56 per cent of businesses reported that

they had been targeted.

The researchers also highlighted

some positive trends. The survey found

that reported incidents of bribery and

corruption had fallen significantly. Ten

per cent of firms said they had dealt

with bribery and corruption over the

past two years, compared with 25 per

cent in the 2020 report. Reports of

accounting and financial statement

fraud had also dipped from 26 per cent

of companies in 2020 to 10 per cent.

Cybercrime was the most frequent

economic crime to affect British com-

panies. Thirty-two per cent said that

they had suffered cyber breaches, but

the trend was down compared with

42 per cent in the 2020 survey.

The report said that cybercrime can

be a precursor to other types of crime.

“Given that systems are now more inte-

grated than ever, there is a major con-

cern that parties in their supply chain

or customer base may prove to be the

weak links in their cyber defences,” it

said. Supply chain fraud was included

for the first time, with 19 per cent of

firms saying they had been victims.

The researchers also warned that as

companies rushed to promote their

socially responsible credentials

through “environment, social and gov-

ernance” programmes, they were

increasingly vulnerable to making

fraudulent claims.

The authors said: “The pressure to

publish targets, and the shareholder

value placed on achieving these — with

linkages frequently put in place

between meeting those targets and

directors’ remuneration — creates an

environment where organisations are

at increasing risk of greenwashing. This

is the attempt to convey a false impress-

ion of their environmental credentials.”

About half of UK respondents said

fraud was committed by external fraud-

sters, compared with 43 per cent glo-

bally. The three leading groups of exter-

nal fraudsters in the UK were custom-

ers, hackers and vendors or suppliers.

Noting the fall in bribery, corruption

and accounting fraud, the report said

the dips were likely to be “temporary”. It

suggested the fall was triggered by the

disruption caused by the coronavirus

pandemic “and may reflect a decrease

in detection rather than occurrence”.

However, it added that there was

anecdotal evidence that “investments

by some organisations in stronger,

better designed and implemented com-

pliance programmes and fraud controls

have improved defences”.

It said serious fraud was most fre-

quently detected by monitoring suspi-

cious activity using forensic technology

and by internal audits. Security proce-

dures and whistleblowers were also

responsible for the detection of fraud.

Fran Marwood, a partner at PwC,

said it was encouraging that “economic

crimes have reduced due to the invest-

ment organisations have made in effec-

tive compliance programmes, cyber de-

fences and fraud-prevention controls”.