Largest fraud cases in the UK

Fraud is extremely common in the UK and billions are stolen each year from all sectors of our economy. Some of the largest frauds in UK history are COVID loan fraud, Carillion PLC and Patisserie Valerie.

Fraud is not just alive and well in the UK, it is flourishing. Years of lax laws, inadequate policing, and a near complete lack of prosecution have emboldened criminals and it can safely be said that it is our nation’s silent epidemic.

Today we will look at some of the largest and most famous instances of fraud in the UK.

COVID loan & payment fraud – est £4.5 billion

In the wake of the COVID-19 pandemic and the ensuing lockdowns the UK government introduced a raft of generous loans and subsidies to both businesses and households, such as Bounce Back Loans. Due to the unprecedented and sudden nature of the crisis, there was very little time to introduce measures to prevent these being fraudulently claimed.

Unsurprisingly, fraudsters exploited this in their droves and fraudulently claimed billions in undue support. What is striking about COVID fraud is that it was not just career criminals who exploited the scheme, many previously legitimate business owners and individuals have since been found to have knowingly and actively stolen money.

The true amount that was stolen via these loans and payments is not yet known, in part due to massive backlog of cases in the court system, but it is estimated to have been at least £4.5 billion. This does not include PPE supply fraud or crimes committed by fraudsters that targeted businesses and individuals.

Carillion PLC - £1.3 billion

Carillion was one of the largest UK construction and service provider companies, with over 43,000 employees across the globe and major contracts from both the private and public sectors.

On the face of it, Carillion was a highly successful company and a shining example of what British business is capable of. However, all was not what it seemed and there were major problems hiding behind the company’s veneer of success.

Aggressively low bidding for contracts, perilously low margins, late payments, delays in projects, and reckless borrowing were creating a financial black hole in the company that it would be unable to fill. Before the extent of its troubles became impossible to hide there were many financial experts who warned its business model was unsustainable.

However, the company hid this for years, primarily by falsifying its accounts to not fully reflect the true amount of debt the company had; a crime made more serious by it being a publicly listed company. Serious failures by auditors failed to spot these irregularities in its reporting, which allowed the deception to continue for years.

When Carillion eventually collapsed, it left £1.2 billion in bad debt to its over 30,000 suppliers, leading to many becoming insolvent themselves.

This case had serious political ramifications and shone a spotlight on the practices in the construction industry and the dangers of negligent auditing.

Patisserie Valerie – caused the collapse of the chain

Patisserie Valerie is a popular bakery chain that has had a resurgence after being bought out of administration. In October 2018, the chain announced it was ceasing trading and entered into administration in the light of serious financial irregularities being discovered.

The chain was found to have a financial blackhole made up of:

• Tangible and intangible assets being overstated by £23m
• Cash being overstated by £54m

• Prepayments and debtors being overstated by £7m

• Creditors being understated by £10m

Rather than being a wide ranging corporate conspiracy involving senior leadership, it is alleged that this fraud was perpetrated by four members of the company’s financial team, including the CFO.

The four Patisserie Valerie employees are scheduled to stand trial in 2026.

Britain’s largest benefit fraud - £53.9 million

Between 2016 and 2021, five Bulgarian nationals carried out our nation’s largest known benefit fraud by exploiting the universal credit system.

They created thousands of fake identities, which they supported with falsified ID documents, doctors letters, employer references, tenancy agreement, and payslips. As well as submitting claims for real people from their native city of Sliven in Bulgaria.

Claims were submitted for these people as if they were UK residents, supported by phoney paperwork, and the ensuing benefits were split between themselves and the gang.

If a face to face meeting was ever required, the five would fly someone out from Bulgaria, sometimes just long enough to attend the meeting before dropping them at the airport again.

The judge presiding over the eventual trial noted that this crime was only possible due to ‘woefully inadequate checking system’ being maintained by the Department of Work and Pensions.

This scheme only came about when a Bulgarian detective in Sliven noticed a huge increase in the number of people undertaking construction and wearing designer labels. He found that some people were receiving up to £2,500 a month in benefits from the UK government. He also estimates that, given the scale of the influx of wealth he has seen, that the true value of the fraud is likely to easily exceed £100 million.

For their part, the five fraudsters were sentenced to 25 years of jail time collectively, with none receiving the maximum punishment of 10 years. 

Fraud is an ever present danger to businesses but their a many checks and processes you can use to protect yours. Speak to one of our experts about how Red Flag Alert will make your company fraud-safe with our anti-fraud solution.