Last month, an asset finance partner at the law firm Norton Rose was asked at a Leasing Life roundtable to comment on the level of fraud in big-ticket leasing.

“Almost zero,” he said.

The attendant lessors and lease brokers seemed shocked at his response.

“How can this be?” one asked. The partner’s answer was simple: because for many years big-ticket lessors have had the benefit of a register of leased assets.

Unfortunately for most of Europe’s small and mid-ticket leasing industry, they have not had the benefit of national asset registers – and, as a result, it has been the victim
of large-scale fraud.

These range from large-scale and organised crime networks down to one-person operations. The type of crime, which also varies considerably, includes complex multiple financings, in which lessors are defrauded of tens of millions of pounds, down to more simple thefts in which lessees simply lie about their financial status.

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European equipment finance lessee fraud

Over the next eight pages of this 23-page special report on the murkier side of European equipment finance, Leasing Life goes behind the scenes on the biggest lessee frauds of recent months.

Also, on pages 18 to 26, we examine two major equipment suppliers whose actions have spawned widespread problems for a host of leasing companies.

In the final section, we look at several lessors and brokers which over recent months have been connected to controversies.

This report, therefore, covers a lot of ground – from fraud and corruption down to more simple cases where companies allege they have been overcharged by suppliers, brokers and ultimately lessors.

With allegations of foul play, as well as fraud in the leasing industry, being on the rise, now is a good time to be covering these issues.

It is also a time of change for the leasing industry. In recent weeks, the Finance & Leasing Association has done what the big-ticket leasing industry – and many countries
around the world, including Spain and France – did a number of years ago. It has created an asset register, which is now up and running for its members to use.

This is great news for the leasing industry – it is a shame, however, this did not take place years ago. If it had been, the likes of Global EPP, Thorneycroft and many other
frauds that have ripped off leasing companies to the tune of millions of pounds would never have happened.

Meanwhile, there appears to be no let-up in the level of equipment finance frauds.

For example, in Italy, a recent report by Assilea, the country’s leasing association, and PriceWaterhouseCoopers revealed that in 2007 fraud caused €30 million of operating losses for leasing companies – compared with just €7.5 million four years’ previous.

Unfortunately, the true amount of equipment finance fraud in the UK is unknown, largely because the Finance & Leasing Association does not provide this information.

Brendan Malkin