Fraud at record high

Prosecutions for major fraud reached a record high during the first six months of the year with a leap to 90 cases - more than the whole of 2002, according to figures published yesterday by accountants KPMG.

Banks and other financial institutions were badly affected by the rise, which KPMG said was mainly due to an increase in electronic payment and identity fraud.

The government was hit by a rise in VAT fraud, with prosecutions involving £69m.

While the number of cases this year has already outstripped last year's total of 83, the average value of each case has declined from £9m to £3m. The total value of fraud in the six months to June 30 was £216m, a 15% fall from last year. The research considered cases involving sums above £100,000 at crown court.

David Alexander, a fraud investigations partner at KPMG, said the decline in the average amount of money stolen would be little comfort to companies, which can see their share price under pressure, their reputations decline and hours spent dealing with the after-effects.

The figures are likely to be viewed with dismay in the Home Office and regional police forces, which are under pressure to devote more resources to fighting financial crime.

Critics have pointed to the dearth of officers with responsibility for dealing with fraud. The Proceeds of Crime Act and new money laundering regulations are likely to lead to a significant rise in reports of suspicious transactions.