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Fraud & Financial Crime

Fraud is notoriously difficult to detect, prove and prosecute. It can take years for some corporate frauds to be exposed, and then usually only because someone got careless.


Even when frauds are detected, they frequently go unreported so as to avoid any adverse publicity. Implicated employees are allowed to resign, bound by strict confidentiality agreements.


Misleading assumptions


Western commentators regularly warn of a high and rising incidence of fraud in Africa. Rarely do they seek to put this into context.


For example, much is made of the infamous Nigerian 419 advance fee frauds, yet seldom is there any reference to the foreign victims’ eagerness to participate in the fraudulent misappropriation of a developing country’s public funds.


Similarly, convenient but improbable and unsubstantiated assertions are widely presented as fact. A recent report, for example, claimed that in Africa most high-value frauds are perpetrated by junior employees. This information was based on a survey of senior executives.


Such distortions and conjecture abound, reinforcing misleading preconceptions and misdirecting resources.


Unconscious bias


Few areas of law are more affected by unconscious bias than fraud. It is probably the single greatest obstacle to its prevention, detection and investigation. Yet its significance is regularly and widely overlooked.


A direct consequence of this is that fraud prevention officers often unwittingly stereotype suspects and end up focussing on the wrong people.


Another is the widespread notion that most occupational frauds are carefully planned deceptions. While some undoubtedly are, many more are a function of circumstance, rather than design, and were not initially intended as frauds.


Greed, opportunity, financial pressures and a sense of entitlement all often play a part in blurring the distinction between what is lawful and unlawful. The choices which may ultimately lead to fraudulent activities at work seldom carry clear warning signs and may at first appear to involve no more than a bit of 'corner cutting'.


Unsurprisingly, the vast majority of those accused of occupational fraud are first-time offenders and do not fit the standard profile of a career criminal.


Compliance and trust


Compliance programmes are essential, for many reasons, but they tend to be of limited value in deterring and detecting much more than the clumsiest of frauds. Stiffer penalties have also had limited success.


Many companies seek to compensate for this by assigning responsibility for key financial functions to trusted individuals, with minimal separation of duties or independent oversight.


This may prevent some frauds. But it also opens the door to others, by allowing dishonest individuals to misappropriate funds and then cover their tracks.


It also allows outsiders to threaten or blackmail staff into diverting funds, and for normally honest personnel to succumb to overwhelming temptation.


What we do


EEE Lex advises both public and private sector clients on fraud and other financial crime, including the adequacy of internal controls and monitoring, reporting and investigation procedures.


We also design and conduct a range of training programmes to develop vital investigatory skills (interviewing, listening, evidence evaluation), as well as to enhance fraud prevention methods (deception analysis, unconscious bias).


In addition, we advise on and help to implement customised whistleblowing programmes.


Several of our senior personnel and associates have extensive experience of preventing, investigating and litigating (prosecuting and defending) a wide variety of complex frauds.


Some have particular areas of expertise; from AML, KYC and PEPs to transfer pricing and procurement fraud, while others excel at wide-ranging investigatory and analytical skills.

When questions fail


All organisations are vulnerable to fraud. It's only a matter of time.


Accordingly, they need to keep asking questions. They also need to ask the right questions; to ask them in the right way; and to listen as much to the answers as to what is not said.


However, relevant interviewing and evidence evaluation skills are hard to come by. It is not enough merely to be reasonably good at these skills – one has to be at least as skilled and alert as the person being interviewed. More often than not, the detail is everything.


These and other difficulties involved in uncovering fraud are prompting many organisations to seek help from independent experts when investigating their suspicions, especially as one can never be certain exactly where the rot starts and ends.


But since even astute questioning has its limitations, many firms have come to accept that whistleblowing may be the single most effective way to deter, detect and disrupt such criminality.

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