Small companies warned over increased danger of fraud

Small businesses have been warned about a possible increase in bribery and fraud as some businesses may turn to underhand methods to combat the credit crunch.

Smaller companies are at the greatest risk as they often wield less power and influence than larger businesses and have fewer resources to check potential deals.

"As affordable credit dries up and working capital shrinks with it, there is a real fear that some businesses may choose to resort to desperate measures to stay afloat and win the orders they need to survive," said the Association of Chartered Certified Accountants (ACCA) head of business law, John Davies.

It is estimated that over £1 trillion has been paid annually around the world in bribes over the last few years and with the current economic downturn there are fears that this figure could rise substantially.

Davies recommends that small business ensure their practices are fair and open to boost their chances of winning contracts from public bodies and large companies.