Crime gangs from West Africa and India have already stolen nearly £400,000 from local authorities in Scotland using fake letters from Mitie and Barr Construction.

Now the scam is spreading across the UK according to an investigation by The Herald.

Fraud investigators have issued a countrywide warning over the con which involves criminals harvesting commercial information published by public-sector bodies for details of their creditors.

Gangs then write to councils and other public bodies, using the headed notepaper of the creditors, asking for electronic payments to be sent to a new account.

The Herald said an English council, which has declined to be named, has lost more than £250,000 to the scam.

North Ayrshire Council has already lost £270,000 and South Lanarkshire more than £100,000.

The National Anti-Fraud Network, a Government body set up to help councils and other public bodies fight fraud, has identified 18 companies being targeted by the gangs.

The firms, many in the construction sector, all have public contracts. The details of these, because of Scottish and UK Freedom of Information laws, are all publicly available.

Jeremy Frost, intelligence officer for the National Anti-Fraud Network, said: “We even have had cases of the fraudsters posing as creditors from big firms and phoning up councils to chase up payments.”

Criminals contact councils by telephone and pretend to be from creditor firms. The criminals then claim they have forgotten their supply account numbers.

Police believe the criminals have been laundering money gained from the scams through the bank accounts of individuals in exchange for a percentage of the take.

English police have made at least two arrests after investigating the fraud.

A man was arrested in London in connection with the investigation, and yesterday a 44-year-old from Wolverhampton appeared at Hamilton Sheriff Court accused of two counts of a fraudulent scheme, in respect of North Ayrshire and South Lanarkshire councils. He made no plea or declaration and was remanded in custody.