HR must be on watch for directors’ fraud

HR must be extra-vigilant against a rise in fraud by company directors during the recession, a lawyer has warned.

Statistics published by the government’s UK Insolvency Service at the weekend revealed that the number of directors banned for criminal malpractice jumped by almost one third (31%), to 1,852 directors who were charged in the 12 months to March.

Disqualification proceedings launched against directors for crimes such as fraud or theft rose by 72%, while cases of misappropriation of assets grew by almost 20%.

Edward Starling, solicitor at law firm Wedlake Bell, warned that company directors were just as likely to commit fraud as junior employees.

“It’s well known that fraud increases in the recession, but it’s possible that some counter-fraud departments miss serious fraud because they are too focused on the smaller fish [more junior employees],” he told Personnel Today.

“The increase in disqualification cases being launched over the past year is huge, and this number will only rise in the coming months.”

Starling added that limited resources for the Insolvency Service, which unearthed the majority of cases of malpractice by directors, would mean many bosses would elude justice.

Research last year found one in five employees admitted to committing fraud by exaggerating expense claims.

Comments are closed.