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Last Updated: Feb 13, 2017 - 1:45:37 AM |
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Freeport, Grand Bahama - Fraud is a deception deliberately practiced in order to secure unfair or unlawful gain; as a legal construct fraud is both a civil wrong and criminal one. In The Bahamas, fraud is very prevalent and in fact is on the increase as fraudulent schemes become more complex and diversified. Retail stores and financial institutions such as banks and insurance companies are frequently targeted. The various methods of fraud make it a very attractive method of criminality for enterprising and intelligent individuals.
Fraud rarely attracts the full attention of law enforcement especially in The Bahamas where the common belief is “Thief from thief and God smiles” as most citizens look on this as a victimless crime. In recent years fraud within The Bahamas has affected they so called “common man” as fraudsters look for susceptible targets for their schemes. Take for example the case of Errol Knowles who was charged with writing fraudulent checks totaling some $32K to various business’ in New Providence or the matter that is closer to home of the alleged prescription drug fraud matter presently before the courts which occurred here in Freeport. We hear of investment companies licensed in The Bahamas being charging in U.S. Federal Courts or Canadian Courts for fraud related matters daily. To say therefor that fraud exists in The Bahamas is an understatement. With the implementation of VAT the motivation to commit fraud will increase. Some economist strongly believe that companies will actively seek to defraud the government as The Bahamas very economic culture has been one of tax evasion stemming from our strength in the banking sector, for decades derived from our tax haven status.
As a director of The Bahamas Chapter of Certified Fraud Examiners one of my goals is to sensitize small business owners who would need to be aware of the cases of fraud and to actively combat it by being proactive. As a security professional my focus will be on physical methods that help in this regard.
The ACFE surveyed 1,483 fraud cases at companies, non- profit and government organizations worldwide; about half surveyed cases were in the United States. Fraud by employee is very expensive, costing companies and business’ about 3.7 trillion dollars per year globally. One of the simplest and most cost effective ways to combat this is by creating an internal fraud hotline. It was reported that in 2012 and 2013 some 42% of fraud cases originated with tips most often from employees. Andy McNeal a co-author of the 2014 Global Fraud Study stated, “There is a lot more fraud that could be detected if organizations were really harnessing this one mechanism.” A fraud hotline can be as simple as a comment box left in a discrete location for employees to give anonymous suggestions or tips or an e-mail address that they can e-mail a senior and trusted manager or an executive with their information. It is imperative that in all of these methods discretion and trust of the whistle blower is maintained. Other methods include management reviews, external audits and IT controls.
A few simple do’s and don’ts therefore for most small businesses would be to first secure your wireless connection. Your guest or free access portion of your network should be isolated from your secure network. Use next generation firewalls; ensure data is strictly controlled including company specific documents and files. Your system can be configured to require administrative permission for documents to be downloaded from your server. Install cameras over the file cabinets or where there is a limited access system. Create a culture of security by sensitizing and educating staff on the importance of date protection.
In retail stores implement robust inventory control, frequent spot checks and make senior persons accountable for inventory shortfalls but this can only work if proper security measures and controls are put in place. Another key tool is creating a code of conduct for employees and providing fraud training for employees including managers and executives. Outline your company’s policy in relation to fraud, be specific in your company’s action to a fraud matter, what will it entail and what will be the outcome if fraud is proved.
Employee fraud is the main culprit for most fraud committed in both retail stores and other businesses. Employers therefore should note the long established rule of 10, 10, 80, which simply states that in most business 10% of people will never steal no matter what, 10% will steal if an opportunity presents itself and 80% of employees will go either way depending on how they rationalize a particular opportunity. Another facet to employee fraud that employers should bear in mind is the fraud triangle. The first part of the triangle is the financial problems or needs that same insurmountable, for example a high gambling debt. The second is the employees belief that their exist at their place of work an opportunity to resolve the financial problem through illegal means without getting caught and finally is the individuals need to rationalize or justify the intended illegal action “ my boss doesn’t pay me enough so this money really is what I worked for already”. Employers can therefore be on the lookout for the first part, put preventive methods in place for the second and therefore negate the third aspect all together.
So as always be aware and be safe!
Gaylord Taylor is a
certified Bahamian fraud examiner and CEO of AGT Security Services in Grand Bahama
© Copyright 2014 by thebahamasweekly.com
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