Bosses 'too afraid to report fraud'

THE former director of the Serious Fraud Office, Rosalind Wright, has accused business bosses of concealing the extent of fraud within and against their companies.

Five months after leaving her post, Wright said many financial institutions were too frightened to report fraud.

Many firms feared damage to their reputations. But the crisis at US energy trader Enron showed there was a far greater risk in not reporting fraud early enough.

'They don't want to lose face with investors, to expose the fact they are victims of the crime,' Wright told an annual financial crime conference. 'Sometimes the fraud is being perpetrated by the chairman and the managing directors and they don't want to tell the investors.

'We don't have a culture that encourages people to come forward and blow the whistle. In the European Commission, we have people treated like pariahs and even losing their jobs for reporting fraud.'

Her comments came as Carol Sergeant, head of regulatory process at the Financial Services Authority, criticised insurers for their failure to tackle or prevent fraud.

Wright also waded into the debate over whether enough is being done to tackle fraud in Britain, claiming trained officers 'are no longer there'.

Last week, Ken Farrow, head of the City of London Police Fraud Squad, said many cases would not be properly investigated unless more resources were committed to the fight. Wright left the SFO after five years to become an independent member of the Strategic Board of the Office of Fair Trading. She also heads the Fraud Advisory Panel.