LONDON

The UK Ministry of Defense (MoD) recovered less than half of the funds it spent over the past four years combating fraud and economic crime, despite the potential to save millions through a more effective approach, according to the country’s independent public spending watchdog on Friday.

In its latest report, the National Audit Office (NAO) said the British Defense Ministry recouped less than half of the money spent over the last four years on tackling criminal economic activity, including procurement fraud, theft of assets such as laptops, weaponry and armor, as well as pay and expenses fraud.

"This is because of ongoing challenges that include a limited shared understanding of departmental objectives, a fragmented structure leading to inefficiencies in investigations, and a historic lack of trust between counter-fraud and police teams," the report said.

The NAO noted that the ministry reports its potential exposure to fraud can reach up to £1.5 billion ($2 billion) a year, mostly linked to procurement.

"Although the MoD receives hundreds of allegations of suspected fraud or economic crime each year, relatively few result in detection, disruption and recovery," it added.

The government expects public bodies to save £3 ($4.12) for every £1 ($1.37) spent on counter-fraud work. However, between 2021-2022 and 2024-2025, the ministry reported a return of just £0.48 (£0.66) for every £1 ($1.37) spent, the watchdog said.

- ‘Exposure to these threats is only set to grow’

The NAO said it identified several key challenges preventing the ministry from strengthening its response to fraud and economic crime, including "not having a department-wide objective to minimise fraud losses and protect defence capability."

Other major obstacles highlighted in the report include a fragmented structure, a historic lack of trust between counter-fraud and police teams, unclear reporting lines, duplication of efforts, and missed investigative opportunities.

The NAO recommended that the Defense Ministry set a department-wide objective to reduce overall estimated financial losses from fraud and economic crime and improve the triaging of cases.

"Using this resource more effectively will require the MoD to reform the way it goes about tackling fraud and other economic crime, but would enable it to achieve real savings that could be used to enhance the country’s defence capability," Gareth Davies, head of the NAO, said.

"As government moves to fulfil its commitment to increase defence spending to 2.5% of GDP by 2027, exposure to these threats is only set to grow," Geoffrey Clifton-Brown, chair of the Committee of Public Accounts, warned in a statement.

He added that it is essential for the ministry to strengthen its approach to managing potential fraud, with greater senior-level attention across the organization to ensure taxpayers’ money is properly directed toward bolstering the UK’s defense capabilities.