The current global economic turmoil and recession in many countries will give rise to economic frauds, which touched more than £1billion in the UK in 2008, the highest in 13 years warns global auditing firm KPMG, and likely to increase as the economic downturn tightens its stranglehold on most countries.

According to KPMG's Fraud Barometer, more than £1 billion frauds were bought to the UK courts last year, the second highest since 21 years, eversince the auditing firm first started the survey in 1987. Frauds in 2008 were also the highest since 1995.

''The 2008 figures are bad enough in themselves, but I fear the trend for the next couple of years will be even worse . . . the real impact of the credit crunch on fraud is yet to be fully felt,'' Hitesh Patel, a fraud investigations partner in KPMG, said.

Corporate frauds were £125 million, a five-fold increase while accounting frauds were over £145 million, compared to £22 million in 2007 while the fraud by individuals increased three-fold from 2007 to around £300 million.

"As the global economic downturn takes hold and organisations look ever more closely at their operations it is very likely that more fraud will come to light so that the real impact of the credit crunch on fraud is yet to be fully felt," the report said.

The financial services sector fraud was at £388 million, which was a 10-fold increase on 2007 although £229 million was accounted for when an international gang of computer hacker's, hatched a daring plan to steal the money from Sumitomo Matsui Banking Corporation's branch in London. (See: Hackers try to steal £229 million from Japanese bank in London)

So called 'income' fraud most commonly occur where buyers are able to declare an income without verification - often referred to as ''liar's loans,'' and mortgage fraud cases, reported a 10-time increase to £36 million compared to £3.7 million in 2007.

Professional gangs involved in revenue fraud, identity theft, investment and advance fee fraud as well as money laundering activities, accounted for £806 million.
Hitesh Patel, fraud investigation partner at KPMG Forensic, warned that most of the fraud committed since 2007, which was when the credit crisis began, has yet to reach courts.

"These figures are bad enough in themselves, but I fear the trend for the next couple of years will be even worse," he said.

In the past year, three frauds running into billions of dollars have been uncovered and the UK should be prepared for its own share of frauds, said Patel.

A case in point is the mother of all ponzi schemes operated by veteran Wall Street money manager Bernard Madoff, whose ponzi scheme resulted in losses to the tune of $50 billion to investors. (See: Madoff's Ponzi scam hits Wall Street)