Adam Aspinall speaks to a man looking to tackle one line of business that is thriving in the recession – corporate fraud.
When you have a disarmed a madman wielding an axe you would think you had seen it all.
But for former police intelligence officer David Kearns the extent of corporate fraud in the Midlands is a constant surprise.
The imposing 42-year-old is the director of Birmingham-based corporate detective agency Expert Investigations.
In the decade since he started his company he has carried out undercover investigations into cases ranging from petty theft to complex financial frauds worth hundreds of thousands of pounds to businesses across the region and beyond.
But rather than seeing his marketplace shrink in the recession he explains he has actually witnessed an increase in fraud as job cuts have dictated a loss of the “checks and balances” that have curtailed criminals in the past.
He said: “We are finding that because of the recession and the job cuts that have come with it, businesses have lost the checks and balances they enjoyed in the past and cannot police themselves as they once did.
“For example we exposed a financial director who had a huge scam submitting fake invoices and undercutting the company’s pensions scheme but the problem was who was going to police him?”
Mr Kearns, who used to work for Warwickshire Police before he took early retirement and decided to go private, runs a close-knit team of investigators pulled from posts across the security industry and which includes ex-special branch officers, former commandos and even special forces personnel.
But Mr Kearns insists this level of expertise is necessary as police forces are simply not equipped to deal with the scale of corporate fraud in our region.
He explained: “In the ten years of doing this job the fraud squad have never picked up on one of our cases because their resources are so limited they have to focus very carefully on what they investigate.
“It is also very difficult to prosecute these cases in court without good evidence so people often go down the civil route which can be long-winded and expensive.
“But it is vital that companies fight corporate fraud on any level because although people may not think a little bit of theft here and there can hurt it can be disastrous for companies in the region. The idea that it is a victimless crime is nonsense.
“One of the big problems – and criminologists often complain about this – is that there just are no reliable figures available for the actual amount of corporate fraud which is actually going on out there.”
According to media reports earlier this year publicly recorded corporate fraud soared to £960 million in the first six months of 2009, compared to a figure of £1.2 billion for the whole of 2008.
But hard facts about the extent of the problem in the Midlands are difficult to come by, although KPMG’s Fraud Barometer highlighted more than
160 cases nationally, involving sums in excess of £100,000 that passed through the courts from January to June.
This was the highest number in the Barometer’s 21-year history.
This comes as no surprise to Mr Kearns and his team who are currently involved in operations across Britain.
He said: “There is currently a significant amount of small time theft, particularly cash taken from offices, but there is a distinct increase in our involvement in large-scale deceptions.
“Last month, we successfully investigated a theft of over £100,000 which implicated employees and wholesalers.
“At present, we are involved with a fraud case which has cost one business over £400,000.
“The manager of this national depot chain over-ordered products, set up his own company and used his depot staff to sell on the stock for his own gain.
“And it’s not just single individuals who lie at the root of such activity.
“We recently investigated a fraud at a national PLC in which company products were stolen by a whole departmental team working together, then sold on internet sites.
‘‘The cost to the business was incalculable.”
While Mr Kearns’ methods may seem extreme to some he insists on the highest professional standards.
He said: “The kind of in-depth investigation we carry out you wouldn’t often get the time to carry out in the police force.
“They simply don’t have the resources and they expect a result straight away.
“But we are not private eyes and do not want to be considered as such.
‘‘That industry is unregulated and people can get into it with no qualifications whatsoever. They just sit in a car with a camcorder with no skill base at all.
“If you are going to do this kind of thing you have to do it properly within a proper legal framework, you have got to know how to gather evidence and present it in the correct way because a good lawyer can undermine your credibility in court with ease if you don’t do it the right way.
“We do most of our work in the commercial sector, especially the legal and housing sector and have simply lifted the police investigation model but minus the bureaucracy.
“In one operation we left two guys in an abandoned building container for 28 days. They had solar panels on the roof for power, air holes, spy holes with cameras and enough food to last them.
“That was a complete success as we captured workers stealing expensive products during the night.”
But Mr Kearns warns that one of the biggest dangers facing Midlands’ companies is denial.
He believes that huge amounts of fraud could be avoided if companies put preventative measures in place earlier and sought advice before it was too late.
He said: “Generally we find we are often called in when it is too late the first time an employer suspects something.
“But the next time, when they have seen the benefits of what we can do, they realise how we can be used as a valuable resource.
“It is not just about sifting through paperwork, it is about getting bodies out there and gathering the evidence direct.”
