The National Fraud Authority reported earlier this year that fraud cost the UK economy £38bn in 2010.   It is estimated that of that figure 55% or £21bn was the cost of fraud to the public sector.  This approximately translates to three pence in every pound spent by Government on public services being lost to fraud.

It is well documented that Governmental department budgets are being cut leading to more pressure on the staff and infrastructure in Central and Local Government to perform their respective roles. The deficit caused by fraud to the public sector only adds to the pressure where such losses would be of greater benefit if available for front line services.

The Audit Commission in 2010 issued a report on fighting fraud by local authorities which highlights the cumulative impact of smaller scale frauds to local councils.

Incasso and Cobbetts are now implementing a bespoke service for Public Authority clients to deal with a range of fraud recoveries work which we have set out below.   In addition to the recoveries work, Cobbetts Fraud & Risk Services team provide in-house counter fraud training and investigation services so to enable our clients to address the prevention and reaction issues arising from loss to fraudulent activities.

Fraud for the purposes of these services can be summarised as any intentional false representation, including failure to declare information or abuse of the position which is carried out to make gain, cause loss or expose another to the risk of loss.

A summary of the types of fraud and services that Incasso and Cobbetts can offer are set out below.

We have also set out a joint initiative Cobbetts have in place with Mazars LLP in respect of recovery of monies arising out of the Proceeds of Crime Act 2002 (POCA) confiscation orders.

Lower Value Fraud Recovery Work

• Provision of investigative and data analytic services as to identifying false claims, for example single person discount (SDP) claims.
• Recovery of discounts afforded for fraudulent SDP claims.
• Recovery of discounts afforded for fraudulent student accommodation council tax dispensation.
• Recovery of non-declaration of occupancy fraud for council tax.
• Recovery of losses from housing tenancy fraud, specifically dealing with unauthorised sub-letting of a property for profit to tenants not permitted to occupy.
• Recovery of excess payments arising from benefits fraud.
• Recovery of excess payments where fraudulent claims are made in respect of personal budgets for care including by the carer of an adult allegedly entitled to the personal budget allowance.

Higher Value/Increased Complexity Fraud Recovery Work

• Investigation and recovery work in respect of fraud arising out of issues of procurement.  This may include false suppliers, diversion of goods, price fixing via collusion and overcharging or duplication of charges.  This fraud is likely to involve employees breaching fiduciary duties to their employer.  This area of fraud costs £2.4bn to the public sector each year.
• Investigation and recovery work in respect of grant fraud.  This will range from applications from fictitious organisations or individuals for public funds, to multiple fraudulent applications to number grant distributors.  It will also cover grants awarded that are not used for the purpose of the application.  This area of fraud costs £515m to the public sector each year.
• Investigation and recovery relating to employee fraud arising from payroll or recruitment fraud.  Payroll fraud can occur when unauthorised changes are made to payroll systems, such as false pension payments or amendments to salary payments or allowances.  It can also occur where employment is offered on the basis of false information provided to gain employment, eg false qualifications or payment history.  This area of fraud costs £329m to the public sector each year.

POCA (Proceeds of Crime) Recovery from Confiscation Order and the benefit of the incentivisation programme for Local Authorities

• Recent reports from the Home Office show that £1 Billion of assets were seized or frozen last year by UK law Enforcement authorities. 
• Local Authorities are being encouraged to use the powers under Proceeds of Crime Act 2002 to target fraudsters who have been enriched through their criminal conduct and to provide effective and robust action against criminals, thereby enhancing consumer protection for the public and local communities. Under the Home Office’s POCA incentive scheme, Local Authorities who have an accredited financial investigator will receive one third of sums, net of costs, recovered under a POCA Confiscation Order, which in these austere times can provide a welcome additional source of revenue.
• Our team can analyse accounts to establish the benefit that a fraudster has made, identify and manage assets subject to a Restraint Order to ensure that they maintain their value and assist preparing the appropriate legal paper work to enable the Court to appoint a receiver.  The receiver can then realise these assets to meet any confiscation order made, with the costs associated with this exercise being met from the assets recovered ensuring that there is no exposure to costs for the Local Authority.
• Our investigation and recovery work in respect of Confiscation Orders with other Councils has indicated that people involved in trademark offences make commercially sensible targets following a criminal conviction, allowing for substantial funds to be recovered.