How Do I Whistleblow?

Whistleblowing is where a worker reports misconduct in order to protect the public. The complaint must be based on your honest perceptions, made without malice and not personal. Essentially, as soon as you have offloaded your concerns and passed on all of the relevant information, the investigation is out of your hands. Whilst this means you have no say over the proceedings, you may request updates on developments. The biggest questions when debating whether to blow the whistle are often: does my concern constitute as whistleblowing and who should I talk to?

Is My Complaint Whistleblowing?

In essence, whistleblowing reports comprise of complaints from workers about misconduct that could harm the public. These can fall into a variety of different categories:

  • Criminal offences
  • Practices that endanger an individual’s health and safety
  • Risk or actual damage to the environment
  • Breaking the law (this includes contractual obligations and health and safety regulations)
  • Miscarriage of justice
  • The belief that someone is covering up wrongdoing

It is important to stress that evidence is not required when documenting a complaint. In fact, gathering evidence can do more harm than good if the individuals involved get wind of your suspicion. Nor is it your responsibility to investigate matters, so simply reporting any concerns is the best course of action.

Who Should I Discuss My Concerns With?

Whilst many organisations have a whistleblowing policy, you are still at liberty to choose someone other than the nominated individual or hotline to report your concerns to. Frequently, workers choose to confide in their managers, but when they are implicated in the wrongdoing, this becomes more troublesome. You are permitted to report concerns to other managers within your organisation as well as your organisation’s legal and compliance team or human resources department. For external advice you can contact lawyers, industry bodies (e.g. trade unions) or external whistleblowing helplines like Acas.

Can I Remain Anonymous?

Yes, however this may hinder the investigation. Some people choose to make their reports anonymously for fear of subsequent victimisation from their team. However, even when their name is not disclosed, their identity is often speculated about amongst colleagues. Maintaining anonymity throughout the process means that you cannot be contacted for further information and that you will not receive updates on the process. Furthermore, since the introduction of the Public Interest Disclosure Act 1998, whistleblowers have received legal protection against mistreatment from employers. The alternative to remaining anonymous is making a confidential disclosure. In this situation, your name will not be released until much later in the process when it is strictly necessary to do so.

What Can I Expect Next?

Once you have made the complaint and given all of the relevant information, your role in the report is complete. After your initial meeting you may be contacted to attend another meeting, or receive a phone call, and pushed for further information. After this, the investigation is out of your hands. You can request to be updated on its progress, but you are relieved of the responsibility of following up your concerns.

Why Should I Whistleblow?

Many people fret about the risks of whistleblowing, predominantly mistreatment within the organisation afterwards. However, the benefits of blowing the whistle largely outweigh the risks. Whistleblowing is an ethical act as it is, or should, be performed in the public’s best interest. It is fundamental in protecting an organisation’s customers. Additionally, creating an open and fair culture protects your organisation against fraud and misconduct and the accompanying repercussions. In order to nurture a culture of whistleblowing it is important to raise awareness amongst employees, publish a whistleblowing policy and implement regular whistleblowing training.

Can a Whistleblower Remain Anonymous?

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As long as they fall into a prescribed category then yes, whistleblowers can remain anonymous. Whistleblowing is where workers report misconduct within an organisation which they believe has the potential to endanger the public. This may be criminal activities, environmental damage or health and safety threats, for instance. Concerns can be reported to a variety of people, including managers, human resources departments, trade unions and external whistleblowing hotlines. Remaining anonymous means that you do not reveal your identity throughout the whistleblowing process, not even to the person you are reporting your concerns to. Some whistleblowers fear victimisation within their organisation after blowing the whistle and remain anonymous in order to minimise this possibility.
What are my Anonymity Options?
As previously mentioned, being an anonymous whistleblower means that no one will know your identity, even the person you are documenting your complaint with. It is important to stress that remaining anonymous does not mean that people won’t suspect you as the source of the information. You still risk raising the suspicions of your work colleagues. An alternative to remaining anonymous is upholding a confidential report. This means that the person you are talking to will know your identity, but it does not mean that it will be publicised unnecessarily. In fact, your identity will be concealed for as long as possible, emerging only late in the investigation or as required in court. Some confidential whistleblowers will not have their identity revealed at all. Some whistleblowers decide to explore the organisation’s confidentiality policy before deciding whether to remain anonymous or not.

Why Might I Want to Remain Anonymous?
Some workers are afraid of suffering negative repercussions after being named as a whistleblower. Concerns are often based on the fear of victimisation from their team or unfair dismissal by their employer. This is largely fuelled by the mindset of a minority that whistleblowers are “snitches”. However, since the introduction of the Public Interest Disclosure Act 1998, workers have received heightened rights over mistreatment following whistleblowing. You can now take issues to an employment tribunal in order to restore justice.
What are the Drawbacks of Remaining Anonymous?
The primary disadvantage of being anonymous through the whistleblowing process is that you cannot be contacted for further information. Throughout the investigative process it may be necessary to contact you, often by organising another meeting or phone call, to harvest crucial information. Remaining anonymous makes this option impossible and may impede or even halt the investigation. Maintaining confidentiality, on the other hand, allows investigators to contact you for more detailed information as the investigation proceeds, since they possess your contact details. Additionally, you will not be contacted with updates on the investigation’s progress if you make your report anonymously. This means that you will be completely removed from the complaint process.
Why is it Important to Report my Concerns?
A large amount of fraud and misconduct can occur within an organisation if workers are prepared to turn a blind eye. Whistleblowing exposes organisations to justice and protects individuals by doing so. Not only does whistleblowing protect an organisation’s customers and its employees, but it also protects the organisation itself. Nurturing a whistleblowing culture allows honesty and transparency to precede and enables employees to focus on the important matters. Avoiding fraud and misconduct in the workplace is essential in avoiding reputational damage, fines and legal prosecution. Whistleblowing allows early detection and rectification of any wrongdoing. Whether we remain anonymous, or simply ask for our confidentiality to be upheld, it is vitally important that we are prepared to blow the whistle on any wrongdoing that we encounter.

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Are Whistleblowers Protected?

The majority of whistleblowers receive protection under the Public Interest Disclosure Act 1998. The Act sought to eradicate victimisation of whistleblowers by their employers and prevent their inappropriate dismissal. Organisations are gradually developing whistleblowing cultures in which it is acceptable, possibly bordering on expected, that workers will report misconduct at work. This helps to protect the general public and reduce the incidence of fraud and misconduct at work. Protection is essential in order to empower workers to speak up.

What is Whistleblowing?

Whistleblowers are workers who report misconduct which has normally been seen at work. Whistleblowing must be for the greater good of the public and not regarding individual matters, which would instead be classed as personal grievance. Some examples of whistleblowing complaints are criminal offences, health and safety risks, environmental damage, miscarriage of justice, breaking the law and the belief that someone is covering up wrongdoing. You can choose who you report your concern to, from: your manager, other managers, the organisation’s legal and compliance team, human resources, a lawyer, an industry body (e.g. a trade union) or an external whistleblowing hotline. This is useful as if, for example, your manager was implicated in the misconduct, you could choose to talk to your human resources department about your worries instead.

The Need for Whistleblower Protection

Whilst many workers’ whistleblowing experience is smooth and productive, others suffer the repercussions of being labelled a whistleblower. Although many hail whistleblowers as brave and ethical, some people view them as snitches. This can generate a hostile atmosphere within teams and result in the victimisation of whistleblowers. Similarly, some suffer persecution at the hands of their employers and prior to the introduction of the Public Interest Disclosure Act 1998, workers risked being dismissed by their employer after blowing the whistle. Additionally, many people worry that their concerns will not be addressed when they blow the whistle.

From 1990 to 1995, around 35 children tragically lost their lives at the hands of Bristol Royal Infirmary’s cardiac surgeons, whilst dozens more suffered irreversible brain damage. The whistleblower, an anaesthetist present in many of these operations, suffered awful mistreatment after compiling information about mortality figures at the hospital. He approached management with the shocking figures but was repeatedly ignored. In fact, his efforts to generate attention nearly led to him being sacked by the trust’s CEO. Upon returning to work after the scandal emerged, he describes being “ostracised” by the medical profession and outlawed from the UK. He now practices as a doctor in Australia. Under the Public Interest Disclosure Act 1998, the anaesthetist would have had stronger rights in the aftermath of the scandal, which would have hopefully seen him remain as a practicing doctor within the UK. Despite the massive injustice in his treatment, this whistleblower revolutionised the way that mortality figures are collated and used within the NHS. Ripples triggered investigations in every corner of the NHS, which uncovered the Mid-Staffordshire NHS Trust scandal amongst many other areas for vital improvement.

Legal Protection

Whistleblowers are protected by the Public Interest Disclosure Act 1998. The Act prevents mistreatment by employers after blowing the whistle. This legal protection extends to you if you are an employee, a former employee, a trainee (e.g. a student nurse), an agency worker or a member of a Limited Liability Partnership (LLP). The Act means that if you suffer mistreatment from your employer as a result of whistleblowing, you have the right to bring the case before an employment tribunal.

Why is it Important to Blow the Whistle?

As well as the fact that protecting the public is an ethical thing to do, there are many additional benefits of whistleblowing. Firstly, the practice prevents cover-ups which could damage individuals or society. Similarly, it protects your organisation against fraud and misconduct. Considering the bigger picture, whistleblowing reduces the massive amount of taxpayers’ money which is spent on fraud every year. However, if the risks of whistleblowing appear too daunting, you could consider making your complaint anonymously. Whilst your complaint will still be addressed, the investigators will not be able to contact you for further information, so you may hinder investigative procedures. Maintaining anonymity also means that you will not be able to receive updates on the progress of your complaint. It is important to recognise that many whistleblowers who remain anonymous are still identified by teammates. But with the relevant protection in place, the fear of repercussions should not stand in the way of blowing the whistle. Whistleblowing training should be undertaken by all workers within an organisation, to protect your workers, your organisation, your customers and the general public.

What Is Fraud Management Training?

What Is Fraud Management Training?

What is Fraud Management Training?

Fraud has been increasing in recent years, especially within the business world. If an employee or a business has been found guilty of fraud following investigation, the business will be subject to severe repercussions administered in alignment with the UK Fraud Act 2006. Therefore, if a company wants to achieve an anti-fraudulent culture within their business, it would be wise to conduct fraud management training to ensure the whole organisation is aware of the fraud prevention procedures which need to be installed.

Why should an organisation conduct fraud management training?

Fraud is on the rise, especially within the business sector, where more and more expanding companies are realising that fraudulent activity has been conducted in their business on behalf of some of their employees. If your organisation is not aware of the fraud that is occurring, there is a potential for the organisation to face severe repercussions.

According to research conducted by PwC, by February 2018 half of UK organisations have been a victim of fraud in the last two years. The most severe fraud offences which affected these UK organisations amounted to the loss of over £72,000. However, it is not just the financial aspects of a fraud offence which affects an organisation, but the reputation of the organisation, which can be sufficiently damaged for allowing fraud to occur. Furthermore, employee morale will drop as there is little attraction in working for an organisation whose reputation has been tarnished and is no longer viewed as an attractive business partner to other organisations.

It is important for those who are on the management board of an organisation to commit to an anti-fraud campaign, to ensure that employees are deterred from such activity. To create a culture which deters employees from fraud, fraud management training will be beneficial.

What will fraud management training teach you?

1) This training will offer all individuals a basic understanding of what fraud is, because although we assume we know what fraud is, the many different forms it can assume can be confusing.

2) This training will identify what specific activity an organisation needs to look out for amongst its employees. If you are aware of the red flags which will highlight potentially corrupt activity, then you will have a head start in preventing this activity from occurring.

3) This training will expose and explain why employees commit fraud. If an organisation is aware of the potential reasons an employee would commit fraud, then they can aim to prevent these reasons from existing.

4) If an organisation has demonstrated that they have conducted fraud management training, then the organisation as a whole will be aware that fraud is not tolerated in their environment. Moreover, a system of trust will be established with the collective goal to prevent fraudulent activity.

KPMG, a large professional service company, has a learning academy with courses which focus upon fraud awareness for their employees to ensure they are educated within fraud and what to look out for. To conduct training such as this, the KPMG management would have to be committed to this cause as well, and their own fraud management training would demonstrate this. In May 2014 KPMG published some documentation from their “Fraud Risk Management” which had the objective of “developing a strategy for prevention, detection and response”. This is a clear indication that KPMG have established an anti-fraud culture within the business, and this will certainly deter employees and associated persons from engaging in fraudulent activity.

If you wish for your organisation to have transparent and ethical business conduct, then you should utilise fraud management training in order to establish the desired business culture for your organisation. Employees and associated people will only comply and replicate the behaviour which is around them; therefore, an example needs to be set by the management team through a demonstration of their own training.

What is Fraud Investigation?

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A fraud investigation is conducted with the intention to protect and offer justice to the victim of a fraudulent offence, and in turn to punish the fraudster responsible for the offence. Fraudulent crime has been rising, and now as an attempt to deter individuals from practicing fraud, the fraud investigation process has intensified in conjunction with the repercussions. If a fraudster has committed a fraudulent offence which is of high risk, they will face potential prosecution at crown court. It is important to be aware of the fraud investigation process and the potential repercussions of fraud, which have the potential to damage an individual and a business both financially and morally.
What is the fraud investigation process?
Initially, in the UK the report of a fraudulent act will be registered with Action Fraud, the national fraud reporting centre. UK citizens are encouraged by the government to contact Action Fraud if they have a suspicion that fraudulent activity has taken place or if they believe that they might have been a victim of fraud. Following this, Action Fraud will decide which fraud reports are of significance and hold the most weight, and set into motion the fraud investigation process, which is carried out by other bodies.

The Department for Work and Pensions, HM Revenue and Customs and the relevant local authorities close to the fraud case are amongst the bodies which are involved in instigating a fraud investigation.
It needs to be decided what type of fraud has occurred because this will tailor the investigation process. Fraud can be hard to determine due to the many different forms which it can take. The most notable forms of fraud are:
Corporate Fraud
Identity Fraud
Benefit Fraud
VAT Fraud
Cyber Fraud
Following the determined type of fraud, all evidence possible will be gathered to bulk out the investigation case. Evidence can be collected through a variety of means, including background checks, surveillance checks, employee investigations and investigations of an entire business. Subsequently, the victims and potential fraudsters will be interviewed. At this stage, if a fraudster admits to the fraudulent offence, they might be issued with a warning, but this is only if the fraud offence is of low-risk.
The relevant council involved, and the Department for Work and Pensions would issue this cautionary warning. This warning would be placed on the UK National Database, but it would not be placed on a criminal record.
If a fraudster does not plead guilty at the interview stage, or their offence is too high risk to simply issue a cautionary warning or a fine, then the investigation will progress to the stage of a court hearing. The magistrates court will be used for these prosecution hearings, but if the fraudulent offence is more severe, then the crown court will be used.
In August 2018 Barnet Council conducted a fraud investigation which resulted in the sending of thirty people to a magistrate court. This was following the incriminating evidence which exposed these individuals to be using disabled parking badges, which were not their own, to allow them to park in disabled parking spots for three months. These individuals had already received warnings. Following this, they were sentenced to a court hearing.
Currently there is an expansive effort to try and crack down on fraud to deter individuals from engaging in it. The fraud investigation process and the subsequent punishments have intensified to highlight that fraud is not tolerated. Consequently, fraud awareness training and prevention is essential.

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What is Fraud by False Representation?

Fraud by false representation is dealt with in Section 2 of the UK Fraud Act 2006, due to the recent increase in fraudulent crimes conducted in this manner. Fraud by false representation involves an individual consciously being dishonest in their account of a certain situation in a way that gains a favourable outcome for the fraudster. It is important to understand when fraud by false representation has occurred and to remain vigilant, as this type of fraud has increased in recent years.

Fraud by false representation:

Section 2 of the UK Fraud Act 2006 stipulates the offence of fraud by false representation. To be found guilty of fraud by false representation, an individual must have made a false representation with the objective of gaining a benefit for either themselves or another individual, at the expense of a loss for the victim.

What is ‘false’ representation? False means that whatever is being represented is purposely misleading or untrue. Section 2 is focused on the Dishonesty Element. To decide whether dishonesty has occurred, the two following factors will be taken into consideration:

– Objective: If the prosecutors believe that an individual’s objective was dishonest, then they will have to consider the following factor.

– Subjective: The prosecutors here will have to decide whether the individual was consciously aware that they were being dishonest, and not just confused by the situation which they were presenting an account of. It tends to be fairly obvious if an individual was aware of their dishonesty and can therefore be the final stage in deciding if an individual is guilty of fraud by false representation.

If it is decided that an individual is responsible for fraud by false representation, then the maximum sentence for this will be 10 years’ imprisonment subject to the UK Fraud Act 2006 penalty thresholds.

The fire at Grenfell Tower in the UK in June 2017 has been subject to many fraud investigations in recent months following the disaster. Some individuals in the aftermath have claimed that they were residents at Grenfell Tower before the fire, allowing them to claim cash and compensation from the government through fraud by false representation. By July 2018, there have so far been six convicted criminals on charges of fraud by false representation.

The most recent conviction is that of 26-year-old Yonatan Eyob, who claimed £81,000 from the government in cash for compensation following the fire and free accommodation, as well as a further £11,000 towards new permanent housing. Eyob claimed that he lived in one of the flats in Grenfell Tower. However, the flat that Eyob said he lived in was actually home to a family of five, who tragically died in the fire.

Neighbours’ testimony and an investigation into Grenfell Tower’s CCTV show that Eyob had never actually lived at the Tower and therefore he has been ordered to appear at Isleworth Crown Court on 24 August 2018 to face sentencing for fraud by false representation. Eyob’s charge includes dishonesty for making a false representation for accommodation and subsistence between June 2017 and June 2018.

Fraud by false representation can be common, and individuals and organisations need to be aware of when this could have potentially happened. If you believe that fraud by false representation could have taken place, then you should report this crime to Action Fraud, the UK’s national fraud and cyber crime reporting centre.

What is Financial Fraud?

Financial fraud is the considerable offence of hacking another individual’s financial transactions or accounts, for a fraudster’s gain. Fraudsters who commit these offences are well-trained and aware of how to receive the highest reward from a transaction. Financial fraud is increasing and therefore it is essential for individuals to protect their financial information from the potential corruption of fraudsters. It is important to be vigilant and aware of when financial fraud has taken place.

What are the different types of financial fraud?

Today, fraudsters are very sophisticated, and can infiltrate another individual’s financial information through many different methods. In 2016 there was a 2% increase from the previous year which led the total of financial fraud losses to become a staggering £768.8 million. This daunting financial loss is a result of fraudsters attacking victims through various means. Consequently, organisations and individuals need to be aware of the varying forms of financial fraud which could affect them.

Credit/Debit Card Fraud:

This a common form of financial fraud. The widespread nature of this type of corruption is partly due to individuals not being vigilant enough to protect their financial information from fraudsters. All it essentially takes is for an individual to either lose their card or for a fraudster to steal an individual’s card and then they can process unauthorised financial transactions. This will only be able to continue until the victim notifies their bank of what has happened. By March 2017 there had been around two million fraudulent cases reported and it was found that payment card fraud is the fastest growing. It is clear that we need to become more vigilant when it comes to our payment cards.

Counterfeit Cards:

This occurs when a fraudster has managed to gain access to enough of your financial and personal information to create a fake card. This can be a very deceptive form of financial fraud, as the victim will rarely be aware of this occurring, due to them having their own bank card with them still. It will only be brought to the victim’s attention once enough fraudulent activity has built up to create a cause for concern.

Ponzi Schemes:

This is how financial fraud can potentially take place within the investment sector, as fraudsters have the potential to create an investment scheme which supposedly promises a high rate of return for fixed term investments. However, in reality the money is not actually invested and is instead used by the fraudster for their own financial benefit.

Phishing:

Due to the rise in online banking and the expanding cyber world in general, fraudsters have been able to utilise cyber outlets to attack online bankers. Phishing emails can be sent to online bankers with the pretence of being a bank and therefore they can request the login details and passwords of individuals, without it seeming out of the ordinary. Online bankers who invest in this phishing email will have all of their financial information compromised to the benefit of the fraudster.

How can you protect yourself against financial fraud?

Banks work extremely hard to combat fraud and to protect the financial and personal information of their customers through robust security systems. These security systems have proved to be fairly successful, as last year UK banks were able to stop £7 of every £10 of attempted financial fraud from occurring. Consequently, fraudsters have now attempted to contact financial customers directly by asking them for online banking passwords.

The director of Financial Fraud Action UK, Katy Worobec, has said that banks and the payment industry as a whole can only do so much to protect their customers against fraud. It is also the responsibility of an individual and a company to be vigilant with their payment conduct. The International Financial Reporting Standards (IFRS) has committed to making international financial markets fair and stable, and has contributed to the crackdown on financial fraud.

It is clear there are many bodies committed to putting an end to financial fraud, and therefore it is an individual’s responsibility to be vigilant and understand specifically how finance fraud can affect them. If you have a suspicion that you have been a victim of financial fraud, contact relevant bodies such as Action Fraud or your bank to see what they can do for you.

What is Cyber Fraud?

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Cyber fraud is the most common and threatening form of fraud which takes place internationally. The cyber world has been expanding and growing throughout the twenty-first century, allowing fraudsters to hack victims’ personal and financial information in a variety of ways. Fraudsters can use the information which they gather to then financially fund themselves, or worryingly they might use this money to fund terrorism. Therefore, it is essential that individuals and organisations are aware of how to protect themselves against cyber fraud.
How serious is cyber fraud and how does it occur?
The cyber world is expanding. We now store more personal and financial information on the internet than ever, and this has unfortunately instigated the increase in cybercrime. The cyber fraud crimes are increasing in severity. For example:

  • In 2013, Target Corporation, the second-largest department store retailer in the United States, were victims of a cyber fraud scam which compromised 40 million customers’ credit card numbers.
  • In 2014, Home Depot, a large US retailer company, had 56 million of their customers’ credit card numbers hacked by fraudsters via cyber crime.
  • In 2015, cyber fraudsters from China hacked into the US Office of Personnel Management and stole more than 20 million people’s personal information, including their fingerprints.

The Annual Fraud Indicator in 2017 found that fraud had cost the UK £190 billion in that single year alone. Moreover, the Office for National Statistics (ONS) have found that of the fraudulent crimes which cost governments masses of money, most of these crimes are in the form of cyber fraud.

Cyber fraud can be considered as any fraudulent crime which is conducted via a computer or computer data. The crimes are extensive. Fraudsters can use the cyber world to gain access to victims’ personal identity, their online accounts and their bank accounts. They can then use the money and information from this to fund terrorism. The extensive and popular use of internet banking and mobile banking means there are more opportunities than ever for criminals to commit cyber fraud. It is a very serious crime – one that needs to be cracked down on.
In 2017 the UK had a positive reaction to cyber fraud as UK cyber card fraud crimes fell by 8%. This has been the first time in the UK since 2011 that cyber fraud crimes targeted at the financial sector has fallen. On top of this, the UK market is the first to witness a reduction in cyber fraud crimes directed at card not present (CNP) transactions. This is due to the UK’s effort to combat cyber fraud as it has invested money into more robust security systems in conjunction with banks. However, this has not been the situation everywhere in Europe, as Denmark and Hungary are still being attacked with cyber fraud crimes aimed at the financial sector, especially CNP transactions.
How can you protect against cyber fraud?
Cyber-crime and fraudsters normally try to hack into victims’ personal and financial information online via phishing emails and viruses. If you receive an email with an attached link which either asks you to present your bank information or to confirm your bank account information, do not do so. The key to avoiding cyber-crime is to understand what your bank and related bodies would ask of you, and they would never email or call you asking for your bank information. Even if the email or the phone call sounds legitimate and honest, you should call the bank yourself and ask them if this email originated from them or not.
Make sure you destroy all traces of your personal and financial information. If a bank has posted you information with your bank details on, ensure that you shred this information, as a fraudster could find this information in a bin and utilise it online to process a CNP payment.
Furthermore, make sure you protect your computer with an anti-virus software to combat any contact made between the fraudster and your computer.
If all of your preventive methods fail, you can always contact the relevant bodies which have been established to combat cyber fraud, such as Action Fraud, which is the UK’s national fraud and cyber-crime reporting centre. Furthermore, the National Fraud Authority is an executive agency of the UK Home Office established to protect the UK economy from fraud. There is help out there for the victims of cyber fraud. It is now time for individuals to be vigilant in protecting their information to combat cyber fraud.

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What is Corporate Fraud?

The term “corporate fraud” has two possible meanings. It can be the fraudulent offence either conducted by a company or a fraudulent offence committed against a company. A corporation can conduct fraud through various means to protect itself against audits and to enhance its reputation in the industry. Alternatively, a corporation can fall victim to the fraudulent activity of its employees in the form of asset misappropriation, corruption and financial statement fraud. Therefore, an organisation needs to be aware of how to follow the correct business conduct to avoid fraud.

How can corporate fraud occur?

Corporate fraud has increased in recent years due to the expanding size of corporations and the increased opportunities which allow corporations to push the boundaries. It can present itself in the following forms:

– In Accounting: Corporations and its employees can doctor the account documents. This is sometimes done with the purpose to conceal the business’ losses.

– Tax: Corporations can evade tax by withholding certain information about the company or through utilising loopholes.

– Assets: Asset misappropriation is a common form of corporate fraud, with around 80% of corporate crimes originating with doctoring of assets.

According to Forbes, corporate fraud occurs most commonly in the IT and computing industries, because there are more outlets to cover fraudulent activity. The US Securities and Exchange Commission (SEC) found within their research that a corporation’s chief executive officer and chief financial officer are involved in around 89% of corporate fraud cases. Within these studies it was also discovered that one of the most successful techniques used to create corporation fraud is not providing the correct revenue or expense documentation, whilst also overstating the company’s assets. Thus, the bodies which should be used to audit a company’s conduct, cannot do so properly because they have been given doctored information to work with.

Enron was a US based energy, commodities, and services company, who were found guilty of dishonest business practice which amounted to corporate fraud. Enron covered up its debt through creating false statements and destroying financial documents which could incriminate them. In the end this deception totalled $2 billion. In October 2001 the Enron scandal heightened and the corporation fell bankrupt, leading people to refer to Enron as the biggest audit failure. The US Securities and Exchange Commission (SEC) conducted an investigation into the fraudulent and corrupt activity which had been escalating within the Enron Corporation. The executives who were involved in the fraudulent activity of Enron were found guilty of destroying financial documents and doctoring of documents which were required by the SEC for the investigation, and therefore they were imprisoned.

How can an organisation prevent fraudulent activities by their employees?

The Annual Fraud Indicator 2017 has published research which states that in relation to fraud in the UK, from October 2017 to March 2018, 62% of the reports to Action Fraud were from businesses, and 39% of reports were from individuals. This highlights that businesses experience a lot of fraud scares within their sector and consequently there needs to be a crackdown on this.

Association of Certified Fraud Examiners (ACFE) conducted a report which examined fraudulent activity within organisations and found that on average it has taken 18 months for such activity to be recognised. In that amount of time a company can lose a lot of money to a fraudster, so organisations should have a robust anti-fraud system in place.

Organisations should know their employees well enough to spot any behavioural changes which could suggest that they might commit fraud. For large organisations it is hard for the management to monitor the changes in attitude of every employee, therefore in-depth screening should be taken when an employee joins the business to analyse whether they have any motives to commit fraud. Then, amongst employees your organisation should establish a reporting system which would hopefully set the precedent that if any strange behaviour does occur, management will be notified.

Controls should be implemented to best protect the assets of a company. There should be minimal opportunity for an employee to commit fraud and corrupt the assets of a company. For example, if you segregate duties then this will contribute to internal controls and reduce the risk of fraud; if any individual does not fulfil their role or does something strange and out of the ordinary, this will become apparent. Furthermore, documentation of everything conducted within the business should be completed and kept safe, to ensure employees cannot alter documentation or destroy it to satisfy themselves.

Corporation fraud is common. Whether it is conducted by the organisation itself or by the employees, it is still a fraudulent offence and all individuals should be aware of it when it has occurred.

 

What is Benefit Fraud?

Benefit fraud is the conscious act of claiming a benefit which you are not legally entitled to. This can be achieved through either lying about your personal information or failing to inform the government regarding a change to your situation. There are a vast range of benefits which an individual can claim, and therefore benefit fraud is widespread and common. The huge financial cost which benefit fraud inflicts upon the UK government has led to a crackdown.

Benefit Fraud:

The welfare state in the UK has established a number of different types of benefits to help British citizens who are struggling in different areas. The Department for Work and Pensions (DWP) are responsible for recognising when benefit fraud has taken place and have published recent studies which expose that benefit fraud cost the government approximately £900 million from 2008 to 2009.

Benefit fraud can be committed by an individual either lying or failing to present vital information which is required to make the decision about whether an individual qualifies for a UK benefit. This type of vital information includes:

– Household income

– Savings

– Whether they live alone or with a partner who contributes to the household income

– The number of properties or land that an individual owns

If an individual lies about any of the above information or fails to document a change in any of the above information, then they will face penalties which include:

– A loss of the benefits that were being claimed for up to 3 years

– Repayment of the money which has been dishonestly claimed across several years

– Prosecution and time in prison

– A criminal record which will affect movements in the future

– A fine of up to £5,000 which can be imposed instead of a criminal record

There are exceptions where, even if an individual has committed benefit fraud, certain benefits cannot be stopped:

– Child benefit

– Child tax credit

– Council tax benefit

– Disability living allowance

– War pension mobility supplement

However, if you do commit benefit fraud on one of the above benefits which cannot be stopped, the other benefits which are claimed can be stopped.

In July 2018 a former Conservative Councillor from Fylde named Albert Pounder, 74 years old, was found guilty of benefit fraud. Pounder was convicted of £10,000 claimed through disability benefit fraud, which he was not qualified to claim for. This vast amount of money had been claimed by Pounder from 2014 to 2016. Preston Crown Court found Pounder guilty of two charges of benefit fraud as they found that he should not have claimed benefits as he was not entitled.

In 1995 Pounder claimed that walking was a big difficulty for him and that he could not complete a 50-yard distance without falling breathless, requiring assistance with walking, washing and essentially living. However, CCTV in 2015 of Pounder offers evidence that Pounder could walk with ease, even whilst conducting manual labour lifting tables.

The Department of Work and Pensions are skilled in investigating suspicious benefit claims, and if found guilty an individual will be subject to the penalties. Geraldine Thomas, 54, was recently found guilty for making fraudulent claims of income support, employment support, housing benefit and council tax. Thomas had been claiming benefits in all of these areas for five years, allowing her to gain up to £41,000 from the government, when she was not entitled to any of this money. Despite lying and claiming she lived alone, Thomas had lived with a partner since 2011, who also contributed to the household income. At Newport Crown Court Thomas was sentenced to a 12-month suspended sentence and an order to retrieve the money and assets amassed from the claims.

Benefit fraud is a common form of fraudulent offence. If you are suspicious of an individual committing benefit fraud you should report this to the Department of Work and Pensions.