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Every day we open our e-mail and are invited to participate in “Investments” or “Help move $25 million out of XYZ”, or Internet Auctions, its no wonder so many people are defrauded. Private banking is a necessity for fortunate but busy people, yet, paradoxically, it can lead to large frauds when large sums are deposited with only a deposit receipt issued. Typically the perpetrators move to another jurisdiction or disappear and the funds get hidden and dispersed. Operational Risk Management Consulting has worked a number of such cases and been successful in recovering substantial assets.
Fraud in overseas branches of multi-nationals is all too common. While prevention could have been better effected by regular audits and ensuring that treasury rules about double signatures etc. were enforced abroad like at home, nevertheless the fraud happened. HQ concern about establishing the scope of local staff involvement and scale of the fraud are addressed by RiskMentor.org making discrete interviews (interrogations) of the suspects under the authority of HQ and, where warranted, conducting desk searches and computer forensics of hard drives to establish the extent of collusion of local staff.
Fraud Case Study 1 : 10K Fraud
A Japanese subsidiary was absorbed by a parent and an agency relationship in the
USA closed down. The former agent demanded exercise of right of sell-back of unsold
inventory and was refused. An investigation revealed that the subsidiary had not
disclosed the sell-back clause in the agency agreement as it would have materially
affected balance sheet worth. The former agents claim was substantiated and they
were recompensed.
