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February 9, 2012

A $1.7 Billion Fraud Born of Earnings Management and a Poor Ethical Culture

The $1.7 billion Olympus fraud, discovered through whistleblowing of the outgoing CEO Michael Woodford, has sent shockwaves throughout the corporate governance world as many wonder if such a fraud could occur at other organizations. To consider this validity of this concern, look at the accounting piece and the role of poor corporate culture that allowed this fraud to continue for 13 years.

Accounting issues aside, Olympus has been criticized for having a poor corporate culture. In an investigation report issued by a third-party committee in December 2011, several suggestions for improving Olympus’s corporate culture were outlined:

• Outside directors should be truly independent, not connected to those in management or the organization’s trade partners.
• The importance of candid conversations and dissenting opinions in creating a culture of accountability and transparency. Per the report: “Fear of rocking the boat or formalities should be eliminated. Developing people who can discuss what he really thinks.”
• The need for the board directors to question the consultation of its advisors. As the report instructs, board members should “thoroughly pursue the truth of the transactions” and not allow a “worthless report of an outside expert” to be “blindly trusted.” This applies to all organizations in that board members should be sure that the approval to take on highly complex transactions is supported by a discussion by management that explains how the transaction generates economic growth. Such discussions would identify transactions that are more form than substance. 
• Use of a whistleblower hotline to “prevent misconduct by executives.”

The report closes with an observation common to many victim organizations that speaks to the need to pursue an ethical work culture as part of any fraud response program, stating, “Olympus had originally been a sound company, with diligent employees and high technical strength. Not all part of the company was involved in this misconduct. Olympus should remove its malignant tumor and literally renew itself.”  Strong words, for certain, but not overstated.

February 9, 2012

Jailed con artist describes role in Google case

When federal investigators decided to look into whether Google Inc. was letting rogue pharmacies from overseas target American consumers with advertising, they turned to a convicted con artist with experience pushing pills on the Internet.

That man, David Whitaker, says he became a pill peddler to support his life on the lam — hawking placebos and tiny water vials online that became a hit with bodybuilders searching the Internet for steroids and other drugs. Now serving a prison sentence for fraud, Whitaker says he spends a lot of time thinking about "the people hurt by the pill problem in America."

In an interview with The Associated Press at a private prison in Central Falls, Whitaker, 37, described for the first time how he took up the online pharmacy business while hiding in Guadalajara, Mexico, from a federal indictment for a multimillion dollar fraud case in Rhode Island.

His experience helped federal investigators orchestrate a 2009 undercover sting that resulted in Google forfeiting $500 million last year. The forfeiture allowed Google to avoid criminal prosecution for allegations that it improperly profited from ads promoting Canadian pharmacies that illegally imported drugs into the United States. U.S. Food and Drug Administration investigators found employees helped create advertising on Google's AdWords system for products they were told were manufactured overseas and did not require customers to have a valid prescription, authorities have said.

"It really changed my life working with the agents with the FDA," said Whitaker, wearing beige, prison-issued clothing.

Businesses using AdWords select keywords for advertising. When people search on Google using a business's keyword, that ad may appear next to the search results.

Shipping prescription drugs into the U.S. is illegal, investigators have said. When the forfeiture was announced, Rhode Island U.S. Attorney Peter F. Neronha said had the case gone to trial prosecutors would have had to prove that Google helped pharmacies violate federal law.

The Internet search engine has said it banned the advertising of prescription drugs in the U.S. by Canadian pharmacies and that it should have never allowed the ads. In 2010, Google announced new restrictions for online pharmacies seeking to advertise with AdWords. A company spokeswoman declined to comment on Whitaker's account of the investigation.

Whitaker has posted a written account of the Google probe online and shares details about his jet-setting past, criminal history and bipolar disorder on a website that is maintained by his lawyer.

He also says he saw the Google representatives he was tasked with snaring as "good people," but the operation convinced him Google was creating an "urgent danger."

One Google representative in Mexico, he said, didn't bat an eye after hearing plans about advertising the prescription abortion pill RU-486. Whitaker said he thought the venture would end the investigation.

"I was actually nervous and afraid. My voice would get shaky talking to him," Whitaker said.

He was wrong. Authorities placed an ad for RU-486 including the language "no prescription needed."

Whitaker fled to Mexico in 2006 while being investigated for allegations he defrauded customers of an electronics business, according to an affidavit filed in federal court.

Even though he was accused of being involved in a multimillion dollar-fraud, Whitaker said he still needed cash while on the run.

He said he got the idea to sells drugs online while visiting a farm supply store. The store had a ceramic horse and cow out front and sold steroids inside, Whitaker said.

Whitaker launched a modest enterprise working a few days a week.

Eventually, he said he expanded by hiring a lawyer and doctors. At its peak, the business was grossing $1 million in monthly revenues, said defense attorney Joseph Balliro Jr.

Whitaker credits AdWords with helping the business take off. He recalls talking with a Google representative in Buenos Aires, Argentina, about the anti-aging, bodybuilding and weight-loss products the site was selling.

"She did not hesitate at all and wanted to start advertising it right away," said Whitaker, reading from a written account of his time in Mexico. He said he deposited $30,000 to start.

"Once they know you had the money to spend, they let you advertise," Whitaker said.

As calls came in from bodybuilders wanting muscle-growing drugs, Whitaker said he consulted with doctors working for him and made a major change, developing a placebo targeting bodybuilders. In a more brazen move, Whitaker said he started selling $1,000 millimeter vials of what he marketed as an injectable sterile liquid purporting to offer multiple health benefits, but was actually water.

Whitaker recalled being surprised by the rave reviews from customers.

"I was expecting people to say, 'This stuff doesn't work,'" he said.

Whitaker said he stopped advertising on AdWords after a few months because he didn't want the additional exposure while on the lam. But the experience became invaluable after he was arrested in 2008 and learned he was facing up to 65 years in prison for the fraud case.

Whitaker recalled getting a tepid response when he described his online pharmacy to federal agents, who were aware of his pill shop.

"Agents don't tend to give you reaction," he said. But by early 2009, he was using undercover websites to see whether Google would allow ads for illicit drugs from abroad.

Whitaker said the first site looked like the handiwork of a Mexican drug lord trading in HGH and steroids. But after a few rejections by Google and some advice from a U.S.-based representative on what revisions to make, Whitaker said the ads went live.

"You have to take the drugs off the site," Whitaker quoted the U.S. representative as saying. "We were fine with it because that meant she knew we were selling drugs."

He said investigators spent about $200,000 on Google ads. Aside from ad spending, Whitaker said Google representatives in the U.S. and Mexico were enticed by his claim that he represented a Mexican hotel chain that wanted to advertise.

In total, Whitaker put in about 1,100 hours working over four months on the sting. He was sentenced in December to nearly six years for the fraud charges and faces a Massachusetts case that hasn't been settled, Balliro said.

Whitaker said he thinks the Google representatives did what they did because of greed.

"I believe these are good people. I think that good people often do get caught up in greed and greed causes them to do things they don't mean to do," he said.

December 22, 2011

MF Global: $1.2 Billion Missing From Segregated Customer Funds

Customers of MF Global have suffered losses in excess of an estimated $1.2 billion since MF Global declared bankruptcy at the end of October. Many of the victims are farmers who used commodities futures in segregated accounts at MF Global as a hedge against price volatility. These farmers may not recover their funds on deposit and, at the very least, have had their accounts frozen while MF Global works through bankruptcy, tying up necessary capital for farmers to invest for the coming growing season.

 

At the center of the current investigation of the MF Global bankruptcy is the trading practice known as rehypothecation. To start with, simple hypothecation is the practice of pledging assets as collateral, something common to many loans that can also occur when investors trade securities on margin. Rehypothecation occurs when brokers re-use customer’s pledged assets as collateral for house trading purposes. The practice of rehypothecation allows for the same asset to be applied against two separate risks. Additionally, the repeated use of the same asset by many parties in the market gives rise to concerns of a shadow banking system and off-balance-sheet financing, because while the pledged assets appear only once on a balance sheet, on the books of the investor the value of the pledged assets flow through the market as the pledged assets of others.

 

The ability of brokers to re-use pledged assets as collateral varies by country. Canadian laws prohibit all rehypothecation, while British laws place no limits on the level of rehypothecation allowed by brokers with investors and brokers determining allowable rehypothecation levels by mutual agreement. American trading standards allow brokers to rehypothecate up to 140 percent of an investor’s pledged assets. So if a customer pledges $1,000 to trade on margin, the broker can count $1,400 as pledged assets for their own trades. 

 

While most trading agreements allow for rehypothecation, $1.2 billion missing from the segregated accounts at the center of the MF Global controversy should have been specifically excluded from such practices. MF Global lost a bundle betting on the European sovereign debt crisis. In recent Congressional testimony, CEO Jon Corzine stated that segregated accounts were not co-mingled with other MF Global funds, and the $1.2 billion missing from the segregated accounts were not used to cover the Euro-sovereign debt trading losses. With so much money missing from segregated customer accounts, it seems unlikely that the facts will support Corzine’s assertions. These are early days in the investigation, and Corzine’s statements will be put to the test.

November 10, 2011

World Bank and OLAF step up efforts to jointly combat fraud and corruption

Enhanced operational cooperation is at the centre of a new Cooperation Arrangement signed today in Brussels between the European Anti-Fraud Office (OLAF) and the World Bank’s Integrity Vice-Presidency (INT), the EC press service announced.

The new Arrangement is a first step towards enhanced cooperation between the two services that was agreed between their leaders within the context of the 12th Conference of International Investigators hosted by the World Bank in Washington in May 2011.

“The European Union and its Member States is the world’s largest donor of development aid. The World Bank is an important player in this field and the trustee of a large part of EU funds. In times of economic crisis, it’s all the more important that we strengthen cooperation between investigative services to prevent fraud and ensure that every cent of international funds reaches the intended beneficiaries,” said OLAF Director-General Giovanni Kessler.

Mr Leonard McCarthy, World Bank Integrity Vice President is paying a two-day visit to Brussels. The main purpose of his visit is to reinforce the existing cooperation with OLAF by further developing the exchange of information between the two services and signing a new Administrative Cooperation Arrangement. Mr McCarthy is also meeting Algirdas Šemeta, Commissioner responsible for anti-fraud, Brian Gray, the Director General of the Commission’s Internal Audit Service, and Pierre Amilhat, the Director of Resources of EuropeAid.

“The World Bank's alliance with OLAF is strong, more so in the light of OLAF's role in protecting the European Union's budget of €130 billion and because of our shared interest in combatting illegal activities. OLAF is one of our primary partners in the fight against corruption. This agreement enables us to take our cooperation to the next level, through joint investigations, strategic analysis and a greater focus on criminal organisations,” said Leonard McCarthy during his visit.

The new Cooperation Arrangement between OLAF and INT will enable the two investigation offices to work more closely throughout the whole investigative cycle by means of a more rapid and more targeted information exchange. It will enable investigators to conduct joint investigations where both the financial interests of the European Union and the World Bank are at stake. It will also allow the two services to exchange staff and to cooperate in the field of training.

October 27, 2011

U.S. trying to seize more than $70M from dictator’s son over alleged corruption

Justice Department officials are trying to seize more than $70 million in assets — including a Malibu mansion and Michael Jackson memorabilia — owned by the playboy son of the dictator of Equatorial Guinea.

 

Prosecutors filed civil forfeiture complaints against Teodoro Nguema Obiang Mangue and moved to seize a variety of valuables, including a 2011 Ferrari 599 GTO worth $533,000, collectibles and clothing valued at $1.8 million that were once owned by pop star Michael Jackson, a $38.5 million Gulfstream G-V business jet, and a house purchased for $30 million on 12 acres of property in Malibu, Calif.

 

In complaints filed or unsealed Tuesday, prosecutors alleged that Nguema used his position as a government minister to plunder more than $100 million from the African nation through “extortion, misappropriation, embezzlement, or theft of public funds.”

 

Nguema — son of President Teodoro Nguema Obiang Mbasogo, who came to power in a coup in 1979 — receives a salary as a government forestry minister of less than $100,000 a year, the Justice Department said.

 

“While his people struggled, he lived the high life,” Assistant Attorney General Lanny A. Breuer said. Attempts to reach a spokesman at the Equatorial Guinea Embassy were unsuccessful. The family has denied corruption allegations in the past.

 

The action is the largest effort to date by the Justice Department’s Kleptocracy Asset Recovery Initiative, created this year to target and recover the proceeds of foreign corruption laundered through the United States.

 

“This should keep suspected kleptocrats with assets in the U.S. awake at night,” said Robert Palmer, a spokesman for the nonprofit Global Witness. The nonprofit claims credit for exposing Nguema’s mansion overlooking the Pacific Ocean in Malibu in 2006.

 

“This is positive, but is it going to take five years to recover any of the other dictators’ assets?” Palmer said.

The civil complaints come as the United States weathers criticism for the pace of its search for assets belonging to the families of the deposed dictators of the Arab Spring. In an interview in Cairo last month, Hasham Gaafar, a senior attorney in the Egyptian prosecutor’s office, said Swiss and United Kingdom authorities have been more responsive to Egypt’s request to freeze and seize assets of former president Hosni Mubarak.

Gaafar said U.S. officials “are not meeting our expectations.”

 

Breuer said he could not comment on the Egyptian request. But he noted that kleptocracy cases are difficult and time-consuming because prosecutors must meet a high bar in showing that stolen assets were acquired through corruption.

 

“We are by far the most robust and active law enforcement partner in the international community,” Breuer said. “That doesn’t mean it is going to happen overnight.”

 

The Equatorial Guinea matter was exposed by the U.S. Senate’s Permanent Subcommittee on Investigations, which in 2004 found that Riggs Bank in Washington held millions of dollars in laundered Equatorial Guinea assets. Riggs pleaded guilty in 2005 to failing to report suspicious transactions and was fined $16 million.

 

The complaint details various spending sprees by Nguema, including a crystal-encrusted glove ($275,000) worn by Jackson during his worldwide “Bad Tour” in the late 1980s; three trademark fedoras worn by the pop star ($162,000); a pair of crystal-covered socks ($80,000); and a basketball signed by both Jackson and Michael Jordan ($245,000).

October 20, 2011

Does UBS Have Controls Worth Banking On?

UBS trader Kweku Adoboli was recently charged by UK authorities with fraud and false accounting for allegedly making unauthorized trades that resulted in a $2.3 billion loss for the Swiss banking group.

According to a statement released by the UK Financial Services Authority (FSA), the FSA and the Swiss Financial Market Supervisory Authority (FINMA) are launching an investigation into the scandal to determine the details of the unauthorized trading and the control failures that allowed the activity to occur. The investigation will include an assessment of the overall strength of UBS's controls to prevent unauthorized or fraudulent trading activity in its investment bank.

UBS appears to be launching its own internal investigation into its controls. In a memo to staff, quoted by Bloomberg News, UBS's head of investment banking, Carsten Kengeter, acknowledged the difficulty in achieving an impenetrable system, but vowed not to rest until controls were "as watertight as possible.”

If UBS interim CEO Sergio Ermotti's sentiment, expressed in a separate staff memo and published by The Wall Street Journal, is any indicator, the investment bank has a long way to go to achieve "watertight" controls. Here's what Ermotti had to say: "Risk and operational systems did detect unauthorised or unexplained activity, but this was not sufficiently investigated nor was appropriate action taken to ensure existing controls were enforced."

Assuming that Ermotti's statement is accurate and that the "unauthorised or unexplained activity" he refers to is that which resulted in the $2.3 billion loss, one might question what role UBS's tone at the top and corporate culture played in Adoboli's approach to trading — for tone and culture comprise the foundation of an internal control system.

October 8, 2011

Be aware of the rogue employee; they may also be in your company

Kweku Adoboli a 31 year old- a London trader at UBS has been arrested by City of London police on suspicion of staggering £1.3billion fraud. Kweku Adoboli’s trades in complex financial products have cast a shadow over the investment banking arm of the fragile Swiss bank that is struggling to recover from the financial crisis.

 

The Zurich-based bank uncovered the incident on 15 September 2011. Shares in UBS plunged nearly 10% after it revealed the loss, which could push the bank into the red for the current financial quarter.

 

The City of London police confirmed they had arrested a 31-year old man at 3.30am in central London on "suspicion of fraud by abuse of position". The police did not identify the individual who remains in custody, but sources say he is Adoboli. The force has begun an investigation.

The Financial Services Authority, the City regulator, is understood to have been informed. People wanting to work in the City often need to be registered with the FSA, and Adoboli's entry shows he has been on the FSA's register since 2006 at UBS.

The bank would not comment but Adoboli is understood to work in its equity division and on a trading desk called Delta One that was involved with its exchange traded funds (ETF) business. ETFs are complex financial instruments that comprise a basket of investments intended to mimic a market's movements while Delta One traders try to make huge profits on tiny differences between prices.

The Serious Fraud Office may yet become involved after it said it was "seeking discussions" with the bank, the City of London police and the FSA about how to proceed if fraud needed to be investigated. The SFO had already issued a warning about the "inherent dangers" of ETFs because of their complexity.

It is understood that the entire trading desk, including Adoboli's supervisor John Hughes, has been sent home while the investigation continues.

Louise Cooper, analyst at BGC Partners, said the losses are rumored to relate to a Swiss franc trade that went wrong after the Swiss National Bank intervened to lower the currency. On 6 September, SNB warned that it would no longer allow one Swiss franc to be worth more than €0.83– equivalent to SFr1.20 to the euro.

"The Swiss currency moved by 8% straight away which is a huge move for FX [foreign exchange] markets. Probably a good guess as to where the loss came from, but at the moment we do not know," she said.

It was not clear, though, whether this was the explanation for what might have gone wrong and UBS did not deviate from a brief statement in which it said it was still trying to get to the bottom of the matter.

On the third anniversary of the collapse of Lehman Brothers, the Swiss bank said: "UBS has discovered a loss due to unauthorized trading by a trader in its investment bank. The matter is still being investigated, but UBS's current estimate of the loss on the trades is in the range of $2bn. It is possible that this could lead UBS to report a loss for the third quarter of 2011."

It added that "no client positions were affected".

The bank refused to elaborate but its executive committee revealed in an internal memo to staff that they had uncovered the alleged fraud on Wednesday.

"We regret to inform you that yesterday we uncovered a case of unauthorized trading by a trader in the investment bank," the memo said. "We have reported it to the markets in line with regulatory disclosure obligations. The matter is still being investigated."

It added: "We understand that you have already had to contend with unfavorable, volatile markets for some time now. While the news is distressing, it will not change the fundamental strength of our firm.

"We urge you to stay focused on your clients, who are counting on you to guide them through these uncertain times," the management urged the staff, who are facing redundancies under cuts announced last month.

UBS's headquarters are in Zurich, but the bank operates in many financial centers. It employs around 6,000 people in the UK, largely in the City, although this rogue trading incident could increase pressure on the bank to reduce the size of the division.

Be aware of the fraud perpetrators as they’re often your most trusted employee.

September 14, 2011

CRI group is certified for ISO 9001:2009

CRI group has initiated its certification audit for ISO 9001:2009, with this certification the company underlines its mission to provide the highest quality and utmost customer satisfaction and loyalty. CRIgroup is the first one investigative services company going to be certified for ISO 9001:2009 in Pakistan.

May 26, 2011

Corporate fraudsters in the Gulf being caught in greater numbers

Corporate fraudsters are getting caught red-handed in ever greater numbers in the Gulf through tighter oversight and the pressures of the financial crisis, according to a survey from Deloitte Corporate Finance.

More than a third of executives in the region reported at least one instance of fraud during the past year, the web-based survey found. Of those, 14 per cent were valued at more than US$1 million (Dh3.6m) and 7 per cent at more than $10m.

The high incidence of fraud may be linked to stepped-up efforts to detect and prosecute it, rather than an actual increase in fraudulent activity, lawyers and fraud investigators said."People are more willing to take action now," said Stephen Millington, who heads financial investigations in the Middle East for Kroll, a corporate investigations company."Before, a fraud may have happened but it was resolved quietly and in-house, whereas now shareholders and boards are acting."

The financial crisis has also exposed frauds that were more easily kept under wraps when profits were rising and the region's economies were booming, said Stuart Paterson, a partner at Herbert Smith, which specialises in corporate fraud and asset recovery.

With the global economy staging a fragile recovery, he said companies now were also more willing to spend money on hiring lawyers and investigators to find fraud and get their money back. "I think there will have been fraud that people have detected as a result of the financial crisis," Mr Smith said. "It's like the age-old quote: when the tide goes out, you see who's left without their trousers on. Because of a lack of liquidity, people are finding it more difficult to conceal their fraud."

The crisis had "also led to increased internal reviews of transactions and systems of controls, and therefore fraud is being discovered more regularly", he said.

More than a third of the executives surveyed by Deloitte said the financial crisis had contributed directly to a rise in fraud. The survey also found the most common forms of fraud were "thefts of physical assets" and "theft or misuse of information".

Almost three-quarters of companies reported having stops in place to detect and prevent fraud, and half had policies protecting corporate whistle-blowers. Those percentages could stand for improvement, Deloitte said, although it acknowledged companies had made progress.

"While our results illustrate an increased exposure to fraud, they also show an improvement in corporate governance standards in the region," said Humphry Hatton, the head of regional forensic and dispute services for Deloitte and the chief executive of Deloitte Corporate Finance Middle East.

"Overall, our results are encouraging and indicate that while organisations have experienced a recent increase in fraud-related activity, they are focused on continually improving controls and implementing risk mitigation strategies," said Mr Hatton.

Better corporate governance had been a driver of the recent surge in fraud investigations, Mr Millington said. One duty of boards of directors was to watch carefully over the companies whose shareholders they served for any evidence of mismanagement.

"Corporate governance is getting more sophisticated in this region," Mr Millington said. "Governance is being implemented in terms of how to react to incidences of fraud, but also to learn from mistakes."

November 23, 2010

Zafar I. Anjum CFE Advances Fraud Investigations Awareness in Pakistan

The Securities Exchange Commission of Pakistan (SECP) recently announced a landmark decision benefitting the anti-fraud community of Pakistan. In response to an appeal made by Zafar Anjum, CFE, CIS, CEO CRI GROUP, the SECP ruled to allow the word “investigation” into the titles of private companies. Click here to read the full article at ACFE website.

March 29, 2010

CRI Group has achieved certification for ISO 9001:2008 Quality Management System.

CRI Group have successfully completed certification audit for ISO 9001:2008 view certificate

 

Quality Management System and has initiated its certification Assessment Process for ISO 27001(Information Security Management System).

CRI Group is the first investigative services providing company in Pakistan who have achieved certification for ISO 9001:2008 Quality Management System,

CRI Group is providing investigation services up to the extent of customer satisfaction regarding Fraud Risk Assessment and Investigations, Forensic Accounting, Intellectual Property Investigations, Due Diligence, Background Investigations and Debt Collection.

 

January 8, 2010

CRIgroup is going to be certified for ISO 9001:2009

CRIgroup has initiated its certification audit for ISO 9001:2009, with this certification the company underlines its mission to provide the highest quality and utmost customer satisfaction and loyalty. CRIgroup is the first one investigative services company going to be certified for ISO 9001:2009 in Pakistan.

September 23, 2009

CRI Group Launches New International Employee Screening Web Platform - Employee Risk Mitigations

Corporate Research and Investigations LLC, a wholly owned subsidiary of CRI Group ( www.crigroup.com) announced the launch of its new online international background screening services platform.  The CRI Group’s International Services platform is specifically developed and devoted to support the investigative research and screening needs of companies employing individuals with international backgrounds as well as to support the needs of background screening providers who need to secure these services with regional presence for their screening clientele. 

Simplicity meets flexibility in a revolutionary ordering process. Our client portal puts convenience and ease into the ordering process with innovative web technology.

• Order a complete background check on one page, with simple controls to add, remove, and edit search details, all on the same page.
• Intuitive workflow makes ordering easy.
• Choose from convenient pre-built packages, or save your own search groups for easy re-ordering.
• Dynamically add and remove searches throughout the entire ordering process.

 

Sign up / Login to CRI Group Employee Background Screening System.

                                                                                           

July 12, 2009

Employee Fraud And Theft Cost Firms $40 Billion Yearly

Employee Fraud, Theft Cost Firms $40 Billion Yearly

As many as one-third of all business failures annually can be attributed to employee theft, according to the U.S. Department of Commerce.

The cost of theft and fraud to American business nationally hovers around $40 billion a year, and "some experts believe as much as 40 percent of the losses are internal," said Tim Zehring, a retired Mesa police officer and director of the International Crime Free Association.

The Commerce Department also says employee theft is on the rise, thanks to the recession, a fact confirmed anecdotally by several Phoenix-based security experts.

"In my experience, what we're seeing is an increase, partly because some employers are more aware," Daniel Perez, head of Subrosa Investigations, told the Arizona Republic. "But it's also true that when some people feel in need, they will take what they believe they can."

Perez said that the effect of hard times can contribute to employee frustration and, coupled with some feelings of entitlement, can lead to a sense that "it's not really stealing."

"It's need plus opportunity plus rationalization," agreed Don Hesselbrock, president of Corporate Security Systems Inc. "People say, 'I worked hard and the company was bought out or merged; I got laid off anyway.' It gives some people a kind of cynicism and a 'get-what-you-can' attitude."

Rick Lew of Scottsdale's Core Security Consulting said, "Businesses need to take the time to assess and address the problems. Usually, companies know the problem but haven't addressed the issues."

The Arizona Republic reports that theft ranges from petty pilfering of a company supply closet to cash siphoned from payroll accounts to pay personal bills to warehouse items that "walk away" during the night.

Critical problems identified by security professionals included business owners' willingness to rely on "gut feelings" in making hiring decisions, a failure to adequately check references or do background checks, a lack of random audits of either company books or warehouse items, and an assumption that employees, especially long-term employees, will protect the company.

Often, these professionals said, employees may be aware that other employees are engaged in theft or fraud but are reluctant to report it. If a problem seems to be relatively minor, many business owners and managers will ignore it.

Additionally, many employers choose not to prosecute when theft is discovered. Many prefer instead to terminate the employee involved and attempt restitution through private arrangements.

July 12, 2009

CRI Middle East LLC Opens Office In The Dubai International Financial Centre.

Corporate Research and Investigations LLC (CRI Middle East LLC) (www.cri.ae), a subsidiary of Corporate Research and Investigations (Pvt) Limited and a leading provider of investigative research services, today announced the opening of its offices in the Dubai International Financial Centre (DIFC).

 

For the past 20 years, CRI Group has been safeguarding clients across the Asia Pacific, South Asia, the Middle East and North Africa by establishing the legal compliance, financial viability and integrity levels of outside partners, suppliers, customers and other sources seeking potential business affiliations.

 

Nasser Al Shaali, CEO of DIFC Authority said: "The ability to effectively pre-empt corporate crimes and conduct timely investigations of crimes and malpractices can save corporations from huge potential losses and reputation damage. Reliable providers of corporate investigative services like CRI can significantly help corporations in dealing with crime, fraud and malpractice.  CRI\\\\\\\'s expertise will add to the diverse pool of business support services available within the DIFC."

 

Zafar I. Anjum, CEO of CRI Middle East, commented on the advantages of utilizing a business investigations firm in an expanding global economy.

 

"Today’s business climate dictates an increasing demand for proactive measures designed to reduce the exposure of international business organizations to economic crime and civil wrongs, particularly in the financial, government and multi-national business sectors,” Anjum said.  “CRI\\\\\\\'s worldwide network of multi-disciplined investigators helps organizations prevent and deter business crimes, employee malfeasance, threats and accounting fraud while ensuring our clients conform to DIFC regulations and UAE laws. The establishment of our offices in the Dubai International Financial Centre gives us the platform to expand our business further and enhance the level of support we offer to the international business community."

 

CRI’s level of professional services spans fraud and white collar crime investigations; business intelligence and investigations; employee, vendor and supplier background investigations; due diligence and “Know-Your-Client” inquiries; insurance fraud investigations; Special Investigation Unit (SIU) services; Risk Management and Corporate Security Consulting; and skip tracing and debt collection services.

 

Contact CRI at +971 509038184 or by email at info@cirgroup.com

July 11, 2009

Operational Risk Management Forum 2009

Corporate Research and Investigations LLC will be exhibiting at the Operational Risk Forum. This event will be of value to any practitioner wishing to stay at the cutting edge of banking operational risk efficiency; it will be of particular relevance to those business leaders working in the following:

Institutions: Banks & Financial Organisations, Insurance Company, Asset/ Investment/ Fund Management, Central Banks & Regulators, Legal Lawyers & Consultants, Rating Agency, Software & Technology Providers

Departments: Risk Management, Operational Risk Management, Compliance, Business Continuity Planning, Internal audit, Anti Money Laundering, Basel II compliance, Operations, HR, IT. For further information and to download the brochure Operational Risk Management Forum.

July 7, 2009

CRI Expanstion - Now A DIFC | Dubai International Financial Center Company

CRI Middle East LLC, sister-concern of Corporate Research and Investigations (Pvt) Limited, is joined DIFC-Dubai International Financial Center and Incorporated as well as licensed with registration No. 0754. That's mean more reliability, confidence, transparency, professionalism  and strong investigative research and Risk management partner amongst the DIFC community and our current most valued clients. As our continuous attempts to excel our services to our valued clients and world's prestigious organizations , and in response to the needs of our growing financial community and fellow colleagues we must adhere with more reliability and compliant with region's most sophisticated regulators and alliances so that we be more effective in our Jurisdiction while offering you ONLY quality services.

For  the last 20 years, CRI Group has earned its client's confidence as a premium provider of investigative research services across Asia pacific, South Asia, Middle East and North Africa specializing the Forensic Accounting, Employment Screening, Corporate Intelligence, Investigative Due Diligence, Corporate Security Investigations and Fraud Risk Investigations.

Now, more than ever, there is a need to take proactive measures to reduce the exposure of business to economic crime and civil wrongs. With the prospect of new business crimes, Employee Malfeasance, threats and accounting fraud around every corner, CRI proves its worth in the Industry.

Now establish from the world's exceptional and fastest growing International Financial Center, the DIFC, CRI Group have great opportunity to expand as well as provide additional support to industry with proactive measures against risks associated with business and finance industry operations.

Thank you for your continued trust and confidence which you have showed in us.

 

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