Fixing Fraud in Public-Private Projects

What’s a cash-tight government to do when it wants to modernize a hospital, build a railway, or expand the power grid to reach underserved areas? It might explore outside, private sources of financing—that’s where public-private partnerships (PPPs) come in. The acronym has a promising ring to it, yet going back to the 1970s, its impact has been mixed. At their best, PPPs can provide rapid injections of cash from private financiers, delivery of quality services, and overall cost-effectiveness the public sector can’t achieve on its own.

But at their worst, PPPs can also drive up costs, under-deliver services, harm the public interest, and introduce new opportunities for fraud, collusion, and corruption. Our experience at the World Bank Integrity Vice Presidency is that because PPPs most often are geared toward providing essential public services in infrastructure, health and education, the integrity risks inherent in these sectors also transfer to PPPs.

See full Press Release: http://blogs.worldbank.org/voices/fixing-fraud-in-public-private-projects

Most fraud is committed by bosses

Research reveals managers are responsible for 61% of all money taken from within companies, or £206m If fraud is usually an inside job, most of it is perpetrated by the bosses of companies involved, according to research by accountants KPMG. Fraud committed from within organisations by management or employees made up 61% of the value of all cases in the accountancy firm's latest fraud barometer, covering the first six months of 2012. See full Article.

EU anti fraud report launched

Executive Summary 2011 was a year of change for OLAF, the European Anti-Fraud Office. An internal review highlighted a number of areas where the efficiency of the Office could be improved. As a result, decisions were taken on changes to the organisation and on a new set of investigative procedures. The changes took effect on 1 February 2012. In 2011, OLAF received 1 046 incoming information items, three quarters of which came from private sources. One in five completed selections resulted in an investigation or coordination case. Out of the 178 cases opened, 144 were investigations. See full Report, in pdf format.

GlaxoSmithKline to pay $3bn in US drug fraud scandal

GlaxoSmithKline is to pay $3bn (£1.9bn) in the largest healthcare fraud settlement in US history. The drug giant is to plead guilty to promoting two drugs for unapproved uses and failing to report safety data about a diabetes drug to the Food and Drug Administration (FDA). The settlement will cover criminal fines as well as civil settlements with the federal and state governments. See full Article.

European Fraud Survey 2011

Summary: In early 2011, our researchers conducted 2,365 interviews with employees in 25 European countries. The results suggest that while there has been an increased focus on compliance in the last five years, some companies still don’t see the benefits. As a result, the corporate response to fraud, bribery and corruption continues to face serious challenges.

In 2006, Ernst & Young performed its first survey of European organizations to find out employees’ perceptions towards fraud risks and how management and board members were responding to these challenges. Since then, the size and scope of our survey have increased significantly.

See full Press Release.

New Transparency International report: EU companies still engaged in foreign bribery, say business executives

EU failing in its obligations to prohibit private sector bribery

There has been no improvement in the propensity of EU firms to bribe foreign officials, according to a new report by Transparency International published today. The report also finds that firms are as likely to bribe each other as government officials, according to a survey of nearly 3000 business executives from 30 developed and developing countries.

EU member states have agreed in principle to prohibit bribery within the private sector, but a recent Commission report shows they have largely failed to meet their obligations.

Press Release, in pdf format.

Who is the typical fraudster?

Who is the typical fraudster? Are there any defining features, traits, or behaviours that could help you to identify those individuals within your organisation more likely to perpetrate fraud?

See document page.

KPMG Ethics & Fraud Hotline

The KPMG Ethics & Fraud Hotline is a tool that may be used by any person irrespective of position or seniority (employee, client or supplier) to report issues of concern that might otherwise be difficult to deal with through normal channels. The KPMG Ethics Line ensures that a caller reporting an incident remains anonymous.

The KPMG Ethics Line has been in existence for over 10 years making agents at the call centre some of the most experienced in South Africa. Operators have extensive expertise and are intimately familiar with the ethical issues facing business in South Africa today.

See full Press Release.

Deloitte Touche sued for $7.6bn in mortgage fraud case

Giant accounting and consulting firm Deloitte Touche Tohmatsu has been accused of failing to detect fraud during audits of a mortgage firm which failed during the US housing crash.

A trust overseeing now-defunct Taylor, Bean & Whitaker (TBW), and one of the company's subsidiaries, have filed complaints in a Florida court.

They are claiming a combined $7.6bn (£4.9bn) in losses.

See full Article.

11th Global Fraud Survey - Driving ethical growth — new markets, new challenges

Having managed through the financial crisis of the last two years, many companies are beginning to focus on growth.

Achieving growth often means planning expansion into new international markets or looking again at potential acquisition targets. Both of these may mean doing business in new geographies, some of which may bring particular fraud, bribery and corruption risks.

Establishing a robust compliance environment to mitigate these risks requires real investment — in leadership time, people, technology and training.

See full Press Release

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Committed to Fraud Prevention

As regulators focus on corruption crackdowns, companies are turning to compliance committees to help them stay on the right track.

Do a Web search for corporate compliance committees, and you'll get hundreds of thousands of results. As compliance issues move front and center thanks to the new U.K. Bribery Act and a renewed focus on the Foreign Corrupt Practices Act (FCPA), compliance committees have become a hot new topic.

Because legislators and regulators in the United States and abroad are paying more attention to bribery and corruption, companies have been forced to reevaluate their compliance efforts and improve them on the fly. In the past, compliance committees have been most prevalent in the health-care industry, but now companies in other industries are creating them as well.

See full Article.

Eliminating Environmental Fraud: The Truth, and Nothing But the Truth, is the Only Option

The term “environmental fraud” calls to mind unconscionable acts of brazen deceit. For example, a rogue company hides a catastrophic discharge of toxic chemicals as executives falsify reports, lie to regulators and skulk around in a Watergate-style coverup.

Truthfully, operators of this caliber would never even read a publication like CCI or heed any compliance-related warnings contained therein.

But while environmental fraud (as opposed to, say, shoddy compliance) does require intentional deceit, even well intentioned companies sometimes run the risk of committing fraud by taking a few furtive steps onto a certain slippery slope that involves “shading” the truth.

See full Article.

Director involvement in fraud climbs

COMPANY bosses are committing an increasing proportion of frauds, with the volume of cases involving senior management increasing to a fifth of all cases.

Globally it was board members who perpetrated fraud in 18% of the cases surveyed, an increase from 11% from 2007, a KPMG report reveals.

“Who is a typical fraudster?” reviewed a sample of 348 white collar crime cases investigated between January 2008 and December 2010, covering 69 countries.

See full Article.

European fraud survey 2011: recovery, regulation and integrity - Ernst & Young - Global

Summary: In early 2011, our researchers conducted 2,365 interviews with employees in 25 European countries. The results suggest that while there has been an increased focus on compliance in the last five years, some companies still don’t see the benefits. As a result, the corporate response to fraud, bribery and corruption continues to face serious challenges.

In 2006, Ernst & Young performed its first survey of European organizations to find out employees’ perceptions towards fraud risks and how management and board members were responding to these challenges. Since then, the size and scope of our survey have increased significantly.

See full Press Release.

Small Business Are Attractive Target for Fraudsters

A new Javelin Strategy & Research report, 2011 Small Business Owners (SMBO) Identity Fraud Report: How SMBO Fraud Rates Impact FI Revenues and Retention,” describes the higher rates of fraud faced by small business owners (SMBOs) today, including unique online security challenges. By sharing effective anti-fraud solutions with SMBOs, FIs and credit card issuers can also create revenue opportunities and reduce client churn. The report outlines the steps SMBOs can take in partnership with financial institutions (FIs) and credit card issuers to combat and prevent online fraud.

SMBOs are an attractive target for fraudsters because they conduct a myriad of transactions that often span both business and personal accounts. As small businesses, they are vulnerable in areas that fraudsters can exploit, namely, the lack of a dedicated IT staff to monitor and protect online operations and less formalized processes around security practices and credit card transactions. This creates opportunities for security breaches and risks for inadvertently releasing personal data.

See full Press Release.

European fraud survey 2011: recovery, regulation and integrity

Summary: In early 2011, our researchers conducted 2,365 interviews with employees in 25 European countries. The results suggest that while there has been an increased focus on compliance in the last five years, some companies still don’t see the benefits. As a result, the corporate response to fraud, bribery and corruption continues to face serious challenges.

In 2006, Ernst & Young performed its first survey of European organizations to find out employees’ perceptions towards fraud risks and how management and board members were responding to these challenges. Since then, the size and scope of our survey have increased significantly.

See full Press Release.

European Court of Auditors - follow-up of Special Report no. 1/2005 concerning the management of the European Anti-Fraud Office

Fighting tax evasion

Tax avoidance and tax evasion threaten government revenues. The US Senate estimates revenue losses from tax evasion by U.S.-based firms and individuals at around 100 billion dollars a year. In many other countries, the sums run into billions of euros. This means fewer resources for infrastructure and services such as education and health, lowering standards of living in both developed and developing economies.

Tax transparency and the fight against cross-border tax evasion have been key topics at G20 Summits in Washington, London, Pittsburgh,Toronto and Seoul (read the presentation by Pier Carlo Padoan of the Report on progress made against international tax evasion).

See full Press Release.

Kroll Releases Top Ten Data Security Trends for 2011

The 2010 calendar year brought with it an onslaught of new regulatory requirements, technological advances and increased scrutiny in data privacy and security matters that have laid the groundwork for a significant shift in how businesses handle data security in the year ahead. Today, Kroll’s Fraud Solutions division has released its data security forecast for 2011, highlighting the key areas where businesses will see the most noteworthy changes with regard to new data security regulations, breach vulnerabilities and protective measures.
"There is no question that the events of 2010 will impact how organizations approach data security in 2011," said Brian Lapidus, chief operating officer for Kroll’s Fraud Solutions division. "Expected changes run the gamut from how organizations prepare for and respond to a breach to the types of breaches they will confront. Organizations can stay ahead of the curve by making sure that they are up to speed on the changing risks – from the top of the organization down."

See full Press Release.