N. G. ACHARYA & D. K. MARATHE COLLEGE

 

SUB: HRM IN BANKING & INSURANCE CLASS: T.Y. BANKING & INSURANCE TOPIC: FRAUDS AND SCAMS UNDER GUIDANCE: SATINDER GUJRAL

GROUP MEMBERS

POOJA. POOJARI 27   SHWETA. DALVI 07  PRIYANKA. SAWANT 37  VEENA. MOOLYA 17

SANDHYA. TAMBE 47

SR. NO. TOPIC

1. Meaning of Fraud?

2. Characteristics of Fraudsters

3. Recent Trends In Internet Scams

4. Survey Report

5. Fraud Preventive Measures Suggested By RBI

6. Effects of Frauds and Scams on Economy

7. Guidance and Corrective Actions

8. Fraud Prevention Measures

9. 2G Scam

10. Suggestions

INDEX

Meaning:

In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud.

CHARACTERISTICS OF FRAUDSTER:

General characteristics of those who commit occupational fraud are listed as under:

Male Intelligent Egotistical Inquisitive & Risk taker Rule breaker Greedy & Financial need Big spender Pressured to perform 

THE RECENT TRENDS IN SCAMS:

Stolen credit cards Purchase scams Online automotive fraud Call tag scam Business opportunity / work at home

schemes Stock market manipulation schemes Money Transfer Fraud

THE INDIAN FRAUD SURVEY REPORT 2011

Over 80 percent of the respondents identified fraud as a serious problem in India, which demolishing the Indian economy.

 Respondents also defined sales and distribution are the most easy way to yet in the fraud scams. 

38 percent of the respondents thought by way of offering bribe they expand their business practices in India.

 Most of the respondents also believe that computers and technology related scam will be a major area of concern in the coming future.

FRAUD PREVENTIVE MEASURES SUGGESTED BY RBI:

RBI always help by issuing the guidelines in regards to “KYC” policies practices.

In recent year the procedure has been developed to stop money laundering at international level whereas in Indian these has used to stop laundering processes.

With the help of anti-money laundering law and their recommendations it gets easy to stop laundering processes.

Smooth working of these measures their should be a proper follow up of legal provisions.

The law of “anti money laundering helps to safe the banks from being used up in the money laundering.

KYC helps the banks to know their customers and their financials risks which helps them to take a major decision

EFFECTS OF FRAUDS & SCAMS IN THE ECONOMY:

The impact of frauds & scams is multifold, encompassing political cost, economic cost, social cost, environmental cost & issues of national security.

Political cost Economic cost Social cost Environmental costs Issues of national security

GUIDANCE AND CORRECTIVE ACTIONS

Effective internal control mechanisms and accountability are required to combat the increasing number of financial system. Suggested measures are:

 1) SEBI should call for special, unexpected audit checks on companies.

2) The Institute of Chartered Accountants on India and the investigating officials in the legal system should initiate proper action against all those who are found guilty of financial frauds.

3) The role of independent directors should be established.4) The Ministry of Finance should make it mandatory for the

companies to publish their balance sheets and probe all relevant details of the independent directors every quarter.

 

FRAUD PREVENTION MEASURESThere are two approaches to help eliminate white-collar

crime: prevention and detection. We believe the best approach is to prevent illegal and inappropriate acts from occurring in the first place.

The following procedures should be instituted to help reduce the risk of impropriety in your organization:

Identify assets for which you have responsibility Identify the risks associated with safeguarding these assets Establish a positive control environment in your department Ensure that an adequate system of internal control exists in your

organization

2G SCAM

2G SCAM: The 2G spectrum scandal involved officials in the

government of India illegally undercharging mobile telephony companies for frequency allocation licenses, which they would use to create 2G subscriptions for cell phones. The law mandated to be collected is estimated to be 176,645 crore .

Much of the credit of bringing this whole scam into the public light goes to Subramanian Swamy who is the chief petitioner for this case in the court of law.

Parties accused of involvement:The selling of the licenses brought attention to three

groups of entities – politicians and bureaucrats, corporations and media professionals.

Politicians involved: A. Raja M. K. Kanimozhi P. Chidambaram Bureaucrats involved: Siddharth Behura RK Chandolia

Corporate Executives involved: Gautam Doshi – Managing Director of Reliance Anil

Dhirubhai Ambani Group Surendra Pipara – senior vice- President of Anil Dhirubhai

Ambani Group and Reliance Telecom Hari Nair – senior vice-president of Anil Dhirubhai Ambani

Group

Film and Entertainment persons involved: Karim Morani – Cineyug Media and Entertainment Ltd’s

Director

Corporations accused: Unitech Group a real estate company entering the

telecom industry with its 2G bid; sold 60 per cent of its company stake at huge profit to Telenor after buying licensing

Loop Mobile Videocon Telecommunications Limited Reliance Communications

Media persons accused:Nira Radia

BARKHA DUTT

VIR SANGHVI

Shortfall of money:A. Raja arranged the sale of the 2G spectrum licenses

below their market value. Soon the telecom company started facing the problem of shortage of money. So they started selling their license & earned a huge amount of profit. But later it was to be found that these profits were earned by selling those license below market value.

Relationship between media and government:Media sources such as OPEN and Outlook reported that Barkha Dutt and Vir Sanghvi knew that corporate lobbyist Nira Radia was influencing the decisions of A. Raja. The critics alleged that Dutt and Sanghvi knew about corruption between the government and the media industry, supported this corrupt activity, and suppressed news reporting the discovery of the corruption.

Ratan Tata petitions over leak: The tapes leaked to the public include conversations

between Nira Radia and Ratan Tata. Tata petitioned the government to acknowledge his right to privacy and demanded accountability for the leak, with the Minister for Home Affairs, CBI, Indian Income Tax Department, the Department of Telecommunication, and the Department of Information Technology as respondents in the petition.

CHRONOLOGY OF EVENTS AND INVESTIGATION:

In the year 2008: Swan telecom, Unitech & Teleservices sell their stakes to Telenor & Docomo.

May 4,2009: telephonic conversations between A. Raja & Nira Radia made public by the media.

Nov 14,2010:A Raja resigns as Telecom Minister. Feb 17,2011:Raja sent to Tihar jail. Feb 18,2011:Balwa sent to judicial custody. Sep 15,2011:Swamy pleads before CBI that P

Chidambaram should be made co-accused. Oct 9,2011:Swamy plea for a probe into Home

Minister Chidambaram’s role in the 2G scam.

RESPONSE TO SCAM:

In early November 2010 Jayalalitha accused the state chief minister M Karunanidhi of protecting A. Raja from corruption charges and called for A. Raja's resignation. By mid November A. Raja resigned. In mid November the comptroller Vinod Raiissued show-cause notices to Unitech, S Tel, Loop Mobile, Datacom (Videocon), and Etisalat to respond to his assertion that all of the 85 licenses granted to these companies did not have the up-front capital required at the time of the application and were in other ways illegal.

SUGGESTIONS:

The following are some of the suggestions that should be adopted:

A sound ethics policy & code of conduct. A well defined policy. Periodic fraud risks assessments. A good internal audit function. A pre-employment screening.

THANK YOU