West Midland companies were hit by frauds totalling nearly £76 million last year as corporate crime rocketed by a third.
The value of UK reported fraud rose by 30 per cent to nearly £1 billion and has virtually tripled since 2003, according to the annual Fraud Track report from accountants BDO Stoy Hayward.
The report highlights the extent to which companies are being ripped off by employees.
The value of insider fraud surged 80 per cent between 2004 and 2005 and was up by 200 per cent since 2003.
Nearly two-thirds (65 per cent) of frauds linked to a specific motive were a result of greed and the desire for a lavish lifestyle. A further 11 per cent were linked to gambling and ten per cent were to pay debts.
BDO said when it comes to stopping fraud businesses are failing to use the honest majority of workers.
Most of those questioned said they would want to report dishonest colleagues, but many would be deterred through not knowing the correct procedure.
More than 90 per cent would want to speak out if they found out their boss had committed fraud.
But many employees find dishonest actions acceptable with one in eight considering it alright for managers to award a lucrative contract to a company owned by a relative.
Sat Plaha, forensic accounting partner at BDO in the Midlands, said: "Awarding contracts to businesses secretly owned by family or friends is a very common method used by fraudsters.
"The services will be over-priced or may never even materialise at all. At a very minimum, companies should expect a full disclosure of any connection a manager has with a supplier. Either way close family connections to a supplier, whether secret or not, will almost inevitably create conflicts of interest for even the most honest manager.
"It is disappointing employee fraud continues to rise at such an alarming rate. The finding employees are still in fear of their livelihood when reporting fraud, despite the introduction of the Public Interest Disclosure Act back in 1998, does not surprise me - in every fraud I have investigated at least one employee admitted to suspicions, but often failed to report them for fear of recriminations." ..SUPL: