21 August 2013

Earthquakes may well bring out the best and the worst of human nature. Once restoration work in Christchurch got underway, a significant level of fraud was anticipated. The Earthquake Commission reported today that it has doubled the number of complaints made to the Police in the past five months. Most cases involve customers claiming for non-earthquake damage; others are where contractors have submitted false invoices. The report data suggests the frequency could be as high as 4%  (40 complaints from 1000 audited claims).

On a more massive scale the British Government has reported progress by the Fraud, Error and Debt (FED) Taskforce in tacking public sector losses through fraud and error. The National Fraud Authority assessed that more than £21 billion was “lost” by agencies in 2011 – mainly through tax and welfare fraud, with losses through error in tax calculations and benefit assessments accounting for a further £9.6 billion. Procurement fraud accounts for about £4 billion.

The estimate is that £7 billion in extra tax revenue is now being harvested each year, more than half by reducing fraud.

The report highlights cross government measures to reduce fraud and error, better system design, a focus on prevention, a “zero tolerance “ for fraud, fraud awareness training for all civil servants and better vetting processes to reduce opportunities for “insider enabled” fraud. Strengthened resilience is being achieved through a network of Counter Fraud Champions. The Cabinet Office Minister believes savings of  £65 billion will be achieved.