Britain's Serious Fraud Office wants bankers and other potential City whisteblowers to come forward with evidence as the credit crisis uncovers fraud and creates the opportunity for a rise in scams.
The SFO said fraud has become more visible during past periods of financial market turmoil as companies get into difficulty and can also encourage more dishonest activity.
“We've found in the past that at times of market turbulence fraud is discovered,” said Richard Alderman, director of the SFO.
“We find out what's been happening as a result of turbulence in the markets and we also find there's opportunity in those markets for more fraud.”
The move comes just days after US authorities arrested renowned Wall Street trader Bernard Madoff over an alleged $50 billion fraud. The alleged complex fraud may have lasted for years and could see dozens of banks and hedge funds lose millions of dollars.
Business fraud in Britain has increased at an alarming rate since the economy worsened, a report by accountancy and advisory firm BDO Stoy Hayward said in the summer.
Reported fraud in the finance and insurance sectors in the first half of this year was Ł636 million ($956.9 million), 15 times the level a year earlier, and was typically from internal management and suppliers rather than organized crime, BDO said.
“The combination of spiraling personal debt and desperate employees spells read danger for business,” the report said.
The SFO, which deals with complex and serious fraud typically involving cases of at least Ł1 million, is asking financial industry workers to blow the whistle on bad practices. It is targeting staff, ex-employees, shareholders and others.
It will also consult legal and accountancy firms to help it identify fraud and is working with international counterparts, including the FBI. (Reuters)