In New York, crooked Ponzi operator Bernie Madoff has busted all the estimates for the global cost of fraud. Closer to home, there are daily reports of “utterly trustworthy employees” turning to fraud of all kinds. In 2007 over £1 billion in fraud cases went to court in the UK. While investigators and prosecuting lawyers acknowledge that 2008 was indeed a bumper year for fraud, there are no signs that the worst is over: the contrary is true. With the downturn in the global economy, individuals in positions of trust are also under personal financial strain. Vigilance and asset protection were never more necessary. For the victims of fraud, the legal process can be frustrating and inconclusive.

Roy Ramm, Chairman, CSi said, “Ending up in the courts prosecuting fraud is painful for the victims as it is for the defendants. Fraud is often complex, difficult for juries to understand and shaded - it’s rarely black and white. There is no miracle golden DNA bullet in fraud investigation. I have seen so many important and worthwhile ‘watertight’ cases sink without trace, it is phenomenally time consuming, often when time is the most valuable commodity in the business, and very dispiriting for the losers who feel they have lost twice over.

For every pound a company saves on fraud prevention it risks at least ten thousand in losses through dishonesty. In tough times, it’s easy to say cut anything that doesn’t add to the bottom line but it’s a bit like a struggling farmer saying I won’t bother with fences or a fisherman not maintaining the nets. It doesn’t make sense.

Fraud prevention medicine and rapid triage intervention does not have to cost the earth but doing nothing can be fatal for a business.

Reducing Exposure and Loss From Fraud:

You can reduce your vulnerability to fraud. You can manage your risk, but you need to be vigilant. You may experience quite clear signals that something is wrong. If you are the person responsible for fraud prevention in your organisation or are concerned that fraud may be occurring - read on.

Trust Your Instincts:

Most people in senior positions in commercial organisations regularly use their instincts in the normal course of business as a valuable tool. Sensing the market and knowing when to move. ‘Feelings’ are often actually the analysis of real signals subconsciously absorbed and synthesised. The same often applies in sensing when something is wrong in an organisation and investigators often unearth and unravel those instincts and feelings by lengthy questioning of witnesses. The outcome is often what you thought was intangible was there to be seen by someone with the right skills and experience.

Here are just a few very basic questions that might help you test whether your instincts deserve to be investigated:

• Your sales have remained constant or even grown, your costs are unchanged but you are making less profit. Why?
• There are other suppliers in the market place who appear to be offering materials at less than you are paying. Why?
• Office supplies are inconsistent with the size of your staff. Why?
• A procurement executive is ‘loyal’ to a supplier though goods are late, expensive or of inferior quality. Why?
• Competitors seem to be able to second guess your business plans. Why?
• Your customers are paying less than the market rate for your goods. Why?
• Staff in positions of trust are being entertained by suppliers without your consent. Why?
• You hear rumours of lifestyle inconsistent with remuneration. Why?
• A person in a position of trust does not want to take a holiday and does not want to train a deputy or assistant. Why?
• Records and accounts you want to see are ‘missing’. Why?

Gathering Intelligence:

Gathering intelligence can appear inappropriate, more suited to government and security organisations, and perhaps misplaced in the corporate environment but nothing could be further from the truth. Knowing about your organisation, who works for you and the people you are doing business with is not only sound business advice but in some instances – for example in the prevention and detection of money laundering – may be a legal requirement. Intelligence is the basis for risk assessment

CSi Managing Director, John Lewis, “Intelligence based risk assessment should underpin the way smart organisations operate. Whether it is straight forward pre-employment screening or deeper due diligence on people you are doing business with the principle remains the same. You would not let a stranger into your home and give them access to your valuables but some companies are remarkably relaxed about giving people they know little about the keys to the office and a password for the IT system. Why?

Knowing about your employees, your customers and your suppliers offers a degree of confidence that provides a genuine business edge. If you don’t think you know the stakeholders in your organisation, how can you be a confident manager? Whether you are investing in people through employment or in business development based on supplier and customer integrity the business case for having good information about those relationships is unarguable.”

Conclusion:

If you are concerned you may already have a problem or want to make sure you have appropriate measures in place to ensure you haven’t, CSi offers a fraud health check on your company.

CSi offers a range of business services from online pre-employment screening to deep investigative probing. Please contact us on tel: 020 7553 7960.