The value of reported fraud in the UK surged to almost £1bn in 2005, a report from accountants BDO Stoy Hayward says.
Fraud rose 30% during the year and has nearly tripled since 2003, according to the firm's annual Fraudtrack report.
Pure greed was the main motivation in two-thirds of fraud, followed by the need to gamble and meet debts, it said.
When it comes to stopping fraud, businesses are missing a trick by not encouraging honest staff to inform on dishonest colleagues, the report added.
About 90% of staff surveyed said they would want to speak out if they came across fraud.
"Our research shows that very few employees - one in 12 - expect any sort of reward or recognition for alerting their management to suspicions of a fraud," Andrew Durant, head of BDO Stoy Hayward's fraud investigations team, said.
But many would be deterred through not knowing the correct procedure or through fear of recrimination.
"Directors need to ensure their businesses move away from a culture where the whistleblower is seen as a 'grasser'," Mr Durant said.
In particular, the accountancy firm identified senior management awarding contracts to firms secretly owned by partners and friends as a burgeoning area of fraud.
"Awarding contracts to businesses secretly owned by family or friends is a very common method used by fraudsters. The services will be overpriced or may never even materialise at all," Mr Durant said.
Tax fraud
But by far the biggest type of fraud being committed was against the tax authorities, the report said.
In 2005, the value of tax fraud increased by 16% to £350m.
This may only be the tip of the iceberg, with recent reports of organised gangs of fraudsters targeting the government's tax credit system.
Fraud continues to be a male-dominated business, with women accounting for 18% of those convicted for fraud.
But despite the rising level of fraud, the report noted that prison sentences awarded for those convicted had had actually declined slightly in 2005.
The average length of sentence is just under two years and 11 months, but 17% of those convicted received a non-custodial sentence in 2005.
And the typical prison sentence for a fraudster taking £1m was less than four years.
Official warning
The Fraudtrack report is published hot on the heals of a stark warning issued by the City watchdog the Financial Services Authority.
The FSA spoke to senior staff at 16 mainly large financial services firms.
It concluded that some companies are still not able to tell adequately where and why they are at risk from fraud.
Companies surveyed by the FSA admitted they were most worried about their own staff being involved in fraud through collusion, coercion, or infiltration.
The FSA said the threat is growing very rapidly, with staff typically offered money to sell confidential information about customers.
(BBC)
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