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Financial crisis sparks surge in fraud, say p -

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Reporter: Sue Lannin

ELEANOR HALL: The number of fraud cases in Britain has jumped dramatically in the last year and the
chief of economic crime in the London Police force says this has been triggered by the global
financial crisis.

There has been a 60 per cent rise in fraud involving both individuals and organised crime groups.
But Stephen Head, from the London Police force, told Sue Lannin, that while fraud is on the rise,
the police are onto it.

STEPHEN HEAD: We're seeing an increase in reporting and there's also an increase, or a scrutiny of
companies. But we're also seeing frauds are coming to light because of the recession, and one of
the best examples of that is mortgage fraud.

As the economic tide goes out, what we're left is we're seeing those companies where they've been
exposed and mortgage fraud is a fine example, something which in 2007 we didn't have any examples
on our books but now we've got several with quite significant amounts of potential loss.

And I think the third reason is that people are making decisions in this time and there is crime
which is directly attributable to the global recession. A good example might be the times when
companies have unfortunately been legitimate previously, but come across hard times and
occasionally when people are facing into the abyss of financial ruin, some of those people will
make a decision and that decision is to become more turned to fraud.

SUE LANNIN: So are we seeing more fraud committed by individuals or more fraud committed by
companies and organised crime?

STEPHEN HEAD: We're seeing across the board more fraud by individuals and organised crime groups.
In fact I can say that over the last 12 months my own department's seen a 60 per cent increase in
reported frauds.

SUE LANNIN: Is it easier to commit fraud during a recession?

STEPHEN HEAD: I think people become more desperate in times of recession and so turn to fraud. I
think we should not underestimate organised crime, who are looking around for opportunities. And
we've seen a number of opportunities where they've targeted quite often with sad consequences.

And certainly one of the things that we've seen in Britain is people who are being made redundant
being targeted by fraudsters and also people who have got life savings and who are relying on those
savings to give them a living are now realising that with interest rates the way they are, they're
facing in some difficult times, and some of those people, by no means all of them but some of them
are turning to fraud.

SUE LANNIN: What's the worst example you've seen in recent times.

STEPHEN HEAD: I've seen people who have become desperate in the sense of their, their living has
been deprived from them in the sense that they had money, they were relying on that money. They are
being targeted by organised crime; who are reaching into them in their own homes, via the internet,
via the phone even via the mail.

They're offering them investment opportunities; a way out of their difficulties if you will. And
some people are taking that opportunity, not knowingly becoming involved in fraud obviously but
because they're vulnerable and because they're facing difficulties and we've seeing those people
being targeted - money taken from them.

And in one instance in actual fact people actually committing suicide as a result of the absolute
tragic circumstances they found themselves in.

SUE LANNIN: What about terrorist groups like al-Qaeda. Are they taking advantage of the global
recession to commit more financial crimes?

STEPHEN HEAD: What I do know is that a lot of fraud that we investigate does have a terrorist
nexus, certainly around credit card frauds. We certainly have at least two units doing nothing but
credit card fraud, full time.

And one of the things that they do is work closely with those agencies which are investigating
terrorism; and wherever we can we make sure we prioritise that as a piece of work.

SUE LANNIN: If you've got organised crime groups or terrorist groups carrying out global crimes
like fraud, how can you possibly fight it?

STEPHEN HEAD: Well we can fight it by cooperating; by sharing intelligence; working together. And
that's not just international law enforcement agencies, but that's also industry which is as global
today, more global than it's ever been. And I think that by working together that offers us without
a shadow of a doubt our best opportunity to defeat global fraud.

SUE LANNIN: But surely these crime groups and terrorist groups have many more resources at their
fingertips compared to government departments that are trying to fight fraud.

STEPHEN HEAD: That's always been an issue in terms of crime, in that criminal gangs have quite
large resources occasionally. What we're actually finding is that we can be effective if we work
together, we find that by pooling our resources we're able to take the finite resources that we
have and use them to the best effect.

It's an important truism that as the economy is cyclical, so is fraud in particular. And now is the
time that we really need to make the best advantage of the relationships that we've built.

ELEANOR HALL: Stephen Head is the chief of economic crime in London's Police force. He's in Sydney
at a conference on fraud this week and spoke to our finance reporter, Sue Lannin.