This supplement is an independent publication from Raconteur Media October 29 2009
corporATe FrAUD
TCorpo
he multiplicity of anti-fraud ef-forts mirrors the different ways in which fraud impacts on busi-nesses and their operations. TCorporate entities are advised to see fraud in terms of a classic cycle of rev-elation, repair and recovery. But within this series of events there are a substan-tial cast of players, national legislative barriers and new tools in use. The truly international nature of fraud is illus-trated by the work of PCB Litigation, a fraud and corporate risk management law firm. PCB operates across a global landscape, recovering and protecting clients’ assets over borders and through multiple jurisdictions. Steven Philippsohn is a founding member of the firm. He is categorical about the need to grasp the practicalities when fighting a global phenomenon. “It’s very important to know local atti-tudes,” says Mr Philippsohn, citing the example that in Russia a court judgment can be obtained over the telephone. Chasing assets which have been fraudulently appropriated is never easy, he admits. “You can have a good case but limited prospects of recovery”. Mr Philippsohn sits on the Asset Recovery Committee of the Serious Organised Crime Agency (SOCA) and the Fraud Advisory Panel.Asked whether the rise of formal counter-fraud initiatives such as these, had made businesses more aware of the dangers of fraud, he hesitated before admitting that a tougher eco-nomic climate has encouraged some executives to push fraud management down their list of priorities. Concentrating on results is un-derstandable but it can leave com-panies and individuals open to dan-ger. Around the world courts have become much more accustomed to holding individuals to blame be-cause they should have been able to prevent a fraud. It is a sobering Fighting fraud on
many fronts
Fraud, whether it is committed by organised criminal gangs or corrupt individuals, is pernicious. Marshalling defences is of growing urgency. But UK counter-fraud agencies present a sometimes bewildering diversity of responses. Michael Dempsey reportsLondon headquarters of the Serious Fraud Office where 88 cases, involving more than £6 billion, are cur-rently under investigationMother of invention Economic down-turn has given rise to e-discovery and sophisticated technology in the fight against fraud. page 5Staging Enron The Enron calamity shook Wall Street and is now set to rock London’s West End as a musical.page 9prospect for any senior executive who tries to keep fraud losses at arms length. Some entirely new players are get-ting in on the act. PCB has developed a relationship with a hedge fund thatbacks asset recovery cases in return for a cut of the settlement. Mr Philippsohn characterises this as “a major, con-structive development” that aids fraud claimants with limited resources. Mark Tantam is a former lawyer with the Serious Fraud Office (SFO) whonow works for business consultants Deloitte where he has led more than 70 fraud investigations. Like lawyers PCB, he sees the fraud challenge largely in terms of recovering purloined assets. Three-STep recoveryDeloitte comes into play when one of its clients has heard an allegation of fraud, and needs Mr Tantam and his colleagues to identify the lapses in control that may have occurred. He characterises the process of re-covery from a fraud as involving three clear stages. Initially, Deloitte will establish a perimeter around the fraudulent ac-tivity, preventing any further dam-age. Then the identities of those in-volved will be confirmed. Last comes the need to work out which controls have failed or have not been in place. Appropriate oversight and manage-ment are subsequently applied.Mr Tantam, who is a partner and global head of investigations at Deloitte, surveys the mass of anti-fraud initiatives with interest and a critical eye. He knows his old em-ployer, the SFO, “has been reaching out to companies, trying to encour-age them to approach it informally when they suspect a fraud has taken place”. The government’s Nationalcontinued on page threeData detectives Geeks, nerds and IT wizards are the new breed of fraud busters as computer software gets smarter. page 10