process / ethical governance · monitor the monitor - who? abuse of authority is a type of faud!!!...
TRANSCRIPT
Process / Ethical Governance
How Far Have We Gone…………….
PREVALENCE OF FRAUD
Fraud is a Worldwide Phenomenon!!!
Fraud may take any shape:
FRAUD
Enterprise Fraud
Internet Fraud
Job Scams
Ponzi / Pyramid Scemes
Social Fraud
Bank Fraud
Lottery Fraud
Credit Card Fraud
Insurance Fraud
Matrimonial Fraud
Internal Factors
External Factors
MEASURES AGAINST FRAUD
ACTs, Rules, Regulations and Anti-Fraud Offices.
FCPA / OFAC
ANTI-MONEY LAUNDERING
THE UK BRIBERY ACT
SFIO
OLAF and CIFAS, UK
UNICORN
OECD / SOCA
BORYOKUDAN HAIJOJOREI
THE DOD-FRANK ACT
IMPACT OF MEASURES
Preventive and Reactive Measures.
Anti-Fraud
Norms
Acts
Rules
Laws Regulations
Education
Bodies
Forums
• Preventions
• Reactions What are These?
FRAUD IS INEVITABLE
Avoid, Reduce, Share or Accept!!!
Lawsuit alleges SEC failure to perform ‘nondiscretionary’ function?
Dodd-Frank won't prevent another financial crisis?
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Region 1Region 2
Region 3
Region 4
FRAUDS ARE INEVITABLE, WHY?
Organizations are still people dependent.
Corporate
Fraud
Execution of norms?
Risk Culture?
Fraudsters with
unique conduit?
Stuck with old
processes?
Out of box
thinking?
Internal Controls?
Personality tests for Senior
positions?
Ethical Governance?
WHAT IS COMMON AMONGST FRAUDSTERS?
Psychology!!!
Greed?
Situation?
Exposure?
Religion?
Color?
Race?
VULNERABLE TO PSYCHOLOGY?
Govern the Processes!!!
LEARNING FROM THE PAST
Have we actually learnt from the past ???
Libor Fraud;
Bernard Madoff Case;
Satyam Scam;
Illegal gold-futures trading scam in China;
Olympus Accounting Scam or AIJ billion dollar pension scandal of Japan;
As small as Wal-Mart fraud and Toilet Paper fraud.
PROCESS / ETHICAL GOVERNANCE
Reiterate the culture of governing the processes.
Differentiate Policies from Processes.
Ethical Governance is an integral part of
Process Governance.
No one shall be spared from passing the test
of Ethics.
REAL TIME INVESTIGATIONS
Lax Processes; Stringent Policies
Grant Fraud
◦ Whose kitty is this?
Procurement Fraud
◦ Use of authority for whose benefit?
Employee Retention
◦ Solution within the problem!
REAL TIME INVESTIGATIONS
Flexible Policies; Stringent Processes
Robust Hiring Process
◦ Too strong to be broken.
Cash Rich Industry
◦ No one at fault.
Personality Clash
◦ Importance for the organization.
MISCELLANEOUS – REAL TIME INVESTIGATIONS
Termination due to managements’ fault
Fake identities
Indirect undesirable associations
Operating in Gray Areas!!!
Even as global literacy rates are high (84%), people
are reading less and less deeply.
FRAUD AND PSYCHOLOGY Personality Test – Pre / Post Fraud?
Situation Authority
Responsibility Process Gaps
Policies Revisits
Personality Test
MONITOR THE MONITOR - WHO?
Abuse of Authority is a type of Faud!!!
Peregrine Financial Group
◦ ‘With careful concealment and blunt authority, CEO was able to hide fraud from others.’
Rajat Gupta – it was greed for more
◦ Who checked him not to divulge?
JP Morgan
◦ Firm's handling of trading in synthetic credit securities was “flawed, complex, poorly reviewed, poorly executed and poorly monitored.”
Bank of America's user authentication scam
◦ Weakness in the banks KYC system.
PROCESS/ETHICAL GOVERNANCE – OTHER ASPECTS OF LIFE
Follow a routine to live long.
Work – Life Balance.
Fight against evil in society.
Struggle or strive for goals.
Make it a
TAKE-AWAY
Don’t distrust key people – Govern them!!!
QUESTIONS and
ANSWERS…………..