Watchdog warns of £1bn annual losses to Welsh public bodies through fraud

Welsh public services could lose up to £1bn a year to fraud, the Auditor General for Wales has warned.

Adrian Crompton said estimated losses caused by fraud against bodies ranged up to £1bn which “gives an indication of the potential risks of fraud facing the public sector in Wales”.   

Counter-fraud measures had to keep pace with the increasing sophistication of fraudsters, whose activities ranged from expenses and procurement frauds to cyber crime.

The most common frauds were committed through corruption, asset misappropriation and financial statements, but in the private sector cyber crime was the main source of fraud and “public services need to work together and find ways to stop criminals exploiting weaknesses in their IT systems”, Crompton said. 

His report, Counter Fraud Arrangements in the Welsh Public Sector, found wide variations in the resources devoted to counter-fraud activity.

NHS Wales invested in both national and local counter-fraud activity, while the Welsh Government gave priority to investigation rather than prevention and local government work differed from council to council.

Crompton said the 2014 creation of a national fraud investigation service by the Department for Work and Pensions had “significantly diluted the capacity for fraud prevention and skill base within local government across Wales”.    

“At a time of continuing austerity, I think it is more important than ever for all public bodies in Wales to seek to minimise the risk of losses through fraud,” he said.

“Organisations must prioritise fraud prevention and can help mitigate the risks of fraud by having the right organisational culture supported by effective counter-fraud arrangements.”

Mark Smulian