Process / Ethical · PDF fileImportance for the organization. ... Weakness in the banks KYC system. ... Slide 1 Author: Administrator Created Date:

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?

Level1

Level 2

0

1

2

3

4

5

6

7

8

9

10

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…………..