It is often dubbed a victimless crime, but a leading business crime lawyer claims that fraud in Scotland is costing companies millions of pounds a year. What’s more, he says, the culprits are being allowed to get away with it.

White-collar crime has risen since the recession hit, but Tom Stocker, a partner in the business crime team at McGrigors law firm in Edinburgh, believes that a large percentage of the country’s business crime is not being dealt with, even when reported to the police. He believes the gap between incidents of fraud and the number that end up in court is down to a lack of resources allocated to the problem in Scotland.

Speaking at an Association of Certified Fraud Examiners (ACFE) conference in Edinburgh, Stocker said: “A company will ask us for advice on whether they should report suspicions of fraud. They make a report and, quite often, nothing seems to happen.

“The scale of fraud in Scotland is a problem that I think is underestimated by the Scottish government. I think in a way they see it as a victimless crime. I am not blaming the law authorities, they just simply do not have the resources or manpower to deal with it.”

The Serious Fraud Office, which does not cover Scotland, has hundreds of forensic lawyers and accountants based in London, while the Financial Services Authority's law enforcement team is also based in the English capital.

In Scotland, each of the country’s eight police forces has just a few specialist fraud officers, while business fraud is only one of a large number of areas to be tackled by the Scottish Intelligence and Co-ordination Unit, which is expected to start work in the new year.

“They are starting to take some action to bring criminals to justice, but they are far behind the game,” said Stocker.

He pointed to the Proceeds of Crime Act, which allows assets obtained through illegal means to be seized through the civil courts, even if the culprit has not been found guilty of a crime. Although the Scottish government has seized £3.5m since the act came into force in 2003, Stocker claimed it was used more widely in England.

Keith Falconer, group financial crime manager at the Edinburgh-based life assurer Standard Life, said internal crimes where a company can present evidence to detectives were dealt with well, but more complex attacks on firms by external groups of organised criminals were often left unsolved.

Falconer, who also spoke at the ACFE conference, attended by company fraud officials and forensic accountants, said: “We have a very good relationship with Lothian & Borders police, but when it is a wider case and we have to go externally and deal with a number of different police force areas, there are often just not the resources there to handle it.”

Last week, a Standard Life employee was sentenced to 205 hours of community service for ordering 205 toner cartridges on company expenses and selling them online for £15,000.

Conservative MSP Gavin Brown, the shadow minister for enterprise, said: “If there are greater frauds going on, businesses are more at risk, particularly smaller businesses. If there is credible evidence that reports of criminal activity are not being pursued to their full extent as much as they could be, then it may be something that government should look into sooner rather than later.”

Scottish police agencies pointed to new measures to tackle business crime, but admitted more could be done.Last year, the Scottish Business Crime Centre, based at Stirling University, was given £750,000 in government cash for 2008 to 2011 to raise awareness of business crime, and a Scottish police officer is working with fraud experts in London to boost expertise up north.

The intelligence unit, which will be co-ordinated by the Scottish Crime and Drug Enforcement Agency (SCDEA), will have a team dedicated to coordinating intelligence around serious and complex fraud, the first of its kind in Scotland. The SCDEA said: “There has been a recognition for some time within law enforcement in Scotland that we needed to do more to tackle areas such as serious and complex fraud.”

A Scottish government spokesman said: “The Scottish government and the other members of the Serious Organised Crime Taskforce are continually looking at what can be done to strengthen our efforts around the Proceeds of Crime Act. The Scottish government treats fraud as a priority.”

jane.bradley@sunday-times.co.uk

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