UK: Protecting Corporate Britain from Fraud - Research Report 2005

Last Updated: 12 January 2006
Article by Gary Miller

Executive Summary


In the last fiscal year, the Serious Fraud Office investigated cases estimated to have cost Corporate Britain more than £2 billion1. More worryingly, the Association of Certified Fraud Examiners estimates that companies lose 6% of their annual revenue to fraud2. Put in terms of the UK's GDP, that is equivalent to undetected and unreported fraud costing businesses over £72 billion every year3.

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.

CEOs, CFOs, Non Executive Directors and Chairmen of Audit Committees of listed companies face a range of regulatory and legal sanctions if they fail to maintain a sound system of internal controls to safeguard shareholders' investment and the company's assets. It is in both their personal and professional interests to ensure that they are aware of, and extract the maximum benefit from, the resources available to prevent, detect and investigate fraud.The largest qualified resource available to Corporate Britain to help manage and minimise the fraud risk is the corporate investigation industry "Investigative Britain" – which includes corporate investigators, forensic accountants and forensic computer specialists.

In the face of increasing exposure to the risk of fraud, mounting pressure on the internal audit function and the explosion of sanctions and reputational risks faced by those whose job it is to safeguard the corporate coffers, Mishcon de Reya's Corporate Investigations and Asset Recovery Group wanted to examine whether Corporate Britain is making the most of the expertise offered by Investigative Britain.

We commissioned an independent survey of FTSE 350 companies to obtain independent data about the relationship between Corporate Britain and Investigative Britain. In particular, we wanted to know whether Corporate Britain understands what Investigative Britain has to offer and conversely whether Investigative Britain is responding to the needs of Corporate Britain.

Key Findings

The results of the survey demonstrated that the disconnect between Corporate Britain and Investigative Britain is more serious than we had anticipated.The results go a long way to explaining why so much fraud goes undetected and that even when fraud is detected, why Corporate Britain is unsuccessful in recovering the proceeds.

The key findings from our research raise some critical questions:

  • Despite 83% of companies stating that they had 'good to excellent' understanding of the value of information gathering, only half of them actually use external investigators.Why is this?
  • Notwithstanding the increases in corporate fraud and regulatory requirements over the last five years, over half of the companies surveyed saw no reason to increase their use of investigators over the same period. Why is this?
  • Is Corporate Britain suffering from denial on a massive scale? Nearly 90% of companies that do not use external investigators felt that there was 'no need' to do so.
  • Is Corporate Britain ignorant of what the investigative world has to offer? Almost one half of the companies surveyed admitted that they were not fully aware of how external investigators could add value to their business.
  • Is Corporate Britain failing to accurately evaluate and effectively manage the risk of fraud? Interestingly, over half of the companies surveyed felt that reputational damage was the greatest risk when it came to instructing commercial investigators, yet only 4% of those who did use external investigators were fully aware of the techniques that those investigators use.
  • Is Corporate Britain missing out on the benefits that can be derived from using external investigators? Over 90% of the companies that use external investigators reported a reasonable or good return on their investment.


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.

The objective of publishing this survey is to highlight the primary misconceptions and suspicions that Corporate Britain has about Investigative Britain and to initiate a dialogue between Corporate Britain and Investigative Britain to dispel them. By doing this, Corporate Britain will be able to derive the maximum benefit from the resources it needs to prevent, detect and investigate fraud.


The research was conducted independently by The Survey Shop and consisted of two phases. The objective of the first phase was to identify directors and managers with responsibility for managing internal and external investigations within the legal, finance and HR departments of FTSE 350 companies.This was achieved through telephone research.The second phase comprised a letter of invitation to assist with the research followed by a telephone interview. Fifty-three interviews were conducted during the first quarter of 2005. 


1. Serious Fraud Office, Annual Report, 2003-2004

2. Association of Certified Fraud Examiners, 2004 Report

to the Nation on Occupational Fraud and Abuse

3. UK GDP figure provided by International Monetary Fund, April 2005

This article is only intended as a general statement and no action should be taken in reliance on it without specific legal advice.

To order a copy of the full report 'Protecting Britain from Fraud' e-mail or call +44 (0)20 7440 7421.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions