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Corruption and Occupational Fraud 34 th Annual Crime Stoppers International Conference Sep 30 – Oct 2, 2013 1.

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Presentation on theme: "Corruption and Occupational Fraud 34 th Annual Crime Stoppers International Conference Sep 30 – Oct 2, 2013 1."— Presentation transcript:

1 Corruption and Occupational Fraud 34 th Annual Crime Stoppers International Conference Sep 30 – Oct 2,

2 Discussion areas Occupational fraud wrap up Whistle-blowing Ethical behaviour Prevention of corruption Campaign financing Other 2

3 ACFE Occupational Fraud Report Association of Certified Fraud Examiners (ACFE) “Report to the Nations 2012” - 1,388 cases of occupational fraud between Jan 2010 and Dec Covers 94 nations - Occupational fraud: The use of one’s occupation for personal enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets ©2012 Association of Certified Fraud Examiners, Inc.3

4 4 Survey participants estimated that the typical organization loses an estimated 5% of its annual revenues to occupational fraud. The Cost of Occupational Fraud

5 Introduction ©2012 Association of Certified Fraud Examiners, Inc.5 Occupational Fraud and Abuse Classification System

6 Types of Occupational Fraud

7 How Occupational Fraud is Committed ©2012 Association of Certified Fraud Examiners, Inc.7

8 8 Frauds are much more likely to be detected by tips than by any other method. Detection of Fraud Schemes

9 ©2012 Association of Certified Fraud Examiners, Inc.9 Initial Detection of Occupational Frauds

10 Detection of Fraud Schemes ©2012 Association of Certified Fraud Examiners, Inc.10 Source of Tips

11 Victim Organizations ©2012 Association of Certified Fraud Examiners, Inc.11 Primary Internal Control Weakness Observed by CFEs

12 Local Findings UWI Cave Hill Department of Management Studies Project involved 95 students conducting interviews with business across Barbados, and a few in Eastern Caribbean Difficulty getting statistics: fraud is under reported Retail sector most prone to fraud Major types: asset misappropriation – cash larceny, theft of merchandise, hire purchase fraud, credit card fraud Did not prosecute: waste of company’s resources, quietly dismissed, dismissed and employee or family member repaid

13 Local Findings Gender: roughly equal number of men and women Age: thirties, mid-forties, fifties Observation: very few businesses had fraud awareness training Length of time with company: most in excess of 5 years Education: majority at least secondary education Reasons given for larceny: needed money for lunch, things for the children, gas; forgot to pay back cash borrowed Measures put in place: electronic surveillance - cameras, use of GPS; tighter controls over movement of cash

14 5 ways to combat fraud Be proactive Establish hiring procedures Train employees in fraud prevention Conduct regular audits Call in an expert

15 Occupational Fraud Questions and discussion 15

16 Crime Stoppers Integrity Line  Anonymous and confidential service for employees to report criminal activities and acts of wrongdoing in workplace  May report bribery, fraud, corruption, money laundering, embezzlement of funds, sexual harassment, theft of company equipment and materials, use of company equipment for personal gain  CORRUPT ( )  Calls answered by Integrity Line staff at UK call centre  Info sent to Chairman of Crime Stoppers Barbados and designated person at company and/or police

17 Effective whistle-blowing  Culture  Awareness of external regulations and requirements  Policy awareness  Feedback  Access to confidential advice and procedures  Procedures for effective dealing with wrongdoers

18 Whistle-blowing What do you believe are some of the primary factors that motivate whistle-blowers? How can some of the criticisms of anonymous whistle-blowing be addressed? What can organizations in public and private sector do to create a culture that supports or encourages whistle-blowing? What can we do to create a national culture that encourages whistle-blowing? 18

19 Ethics Is there general agreement in our society as to what constitutes ethical and unethical behavior? Can you suggest any examples of unethical behavior that are tolerated in the public and private sector, or generally in society? What can organizations in the public and private sector do to create a culture that encourages ethical behaviour? What can we do to create a national culture that encourages ethical behaviour? 19

20 Prevention of Corruption Act BACKGROUND  Act passed Dec 2012  Implementation required under  Inter-American Convention Against Corruption, 1996  UN Convention Against Transnational Organized Crime (Articles 8 and 9)  UN Convention Against Corruption, 2003

21 Prevention of Corruption Commission  Members to be appointed or removed by the Governor- General (First Schedule) Functions  Receive and verify accuracy of declarations  Independent enquiries and investigations into allegations of corruption or non-compliance with Act  May forward recommendations to DPP

22 Prevention of Corruption Commission  Chairman: former judge or attorney of at least 15 years’ standing  Deputy: attorney of at least 15 years’ standing  Chartered accountant of at least 7 years’ standing  Attorney-at-law of at least 7 years’ standing  Two members appointed on advice of the PM  Two members appointed on behalf of the Leader of the Opposition Members must be persons of high public standing and repute.

23 Financial Disclosure  annual declaration must be filed by every person in public life (Third Schedule)  penalty for failing to file or for knowingly making a materially false declaration is fine of $500,000, imprisonment for 5 years or both  declarations of members of Commission are submitted to the Governor-General  annual declarations must be filed within 3 months of end of year

24 Persons in Public Life  Chairmen, board members, chief executives of statutory boards and companies controlled by government  Heads of government departments  Judges, magistrates  Members of Parliament  Members of Prevention of Corruption Commission  Permanent Secretaries and officers of related grades  President and CEO of registered trade union

25 Annual Declaration  assets, income and liabilities  office or offices  assets of spouse and unmarried children under age 18  gifts or series of gifts > $500 from a person who is not a family member or relative  declaration must cover assets, income and liabilities held by agent on person’s behalf

26 Processing declarations Trinidad: o backlog from 2011 – 3,352 o received in 2012 – 1,764 o certified in (2,019) o backlog carried forward – 3,097 o 733 names published for failure to file Jamaica (2011/12) o compliance rate 59%; 10,000 declarations outstanding for year o 124,072 filed up to March 2012; 69,086 o/s o 619 delinquents prosecuted since 2003

27 Prevention of Corruption Act Is the requirement to declare assets, income and liabilities to the Prevention of Corruption Committee a justifiable invasion of privacy? Will the requirement for asset declarations deter citizens from public service? Will asset declarations be effective in deterring and detecting corruption? Are too many individuals being asked to declare their assets? Any other comments? 27

28 Declaration by political parties  Parties contesting general election must declare name and address of every financial contributor  Cover contributions made within 2 years prior to and 6 months after general election  Political leader, president, chairman or secretary liable to fine of $500,000 or imprisonment for 5 years or both

29 Campaign Finance Should contributions to political parties in Barbados be disclosed to the public? Should election campaigns in Barbados be financed entirely by the state, to limit potential for undue influence by donors? Any other comments? 29

30 ANY OTHER BUSINESS 30

31 Corruption and Occupational Fraud THANK YOU 31


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