Highlights from the 2017 ACFE Fraud Conference Europe


Mandy Moody, CFE
ACFE Content Manager

Last week, more than 250 fraud fighters from the European region gathered in London to discuss the latest in fraud examination techniques, ethics and more. In addition to a presentation by convicted UBS trader, Kweku Adoboli (read the New York Times article, "A Rogue Trader Blames the System, but Not All Are Persuaded"), attendees walked away with actionable items to include in their own daily activities for preventing and detecting fraud. A few of the highlights include: 

When and how to approach law enforcement and prosecution
A panel of investigators discussed tips for companies and individuals to follow when reporting fraud to law enforcement:

  • Include a well-written report that defines intent. As Pennings said, “It is easier to conduct an investigation once there is a clear sign of intent. It has to hold water that it was intentional and not an accident.”
  • Make sure there is a clear collection of evidence. According to Pennings, you can’t recreate a path of evidence after the fact. It may be best to train your employees on how to forensically collect evidence at a crime scene.
  • Complete and submit a report that tells a cohesive story. Felton explained that his reports are only about half a page, so companies have to tell that story succinctly and efficiently. “If it is not clear in your head, then you have got a problem,” Felton said. “When you can’t even read through it and can’t understand it, you have got a problem. Sometimes I can’t find an offense.”

Read the full recap.

A strong ethical framework is good for business
Laura Davies, Director of Fraud at Huntswood, explained that understanding the current global landscape and putting an emphasis on culture is a step in the right direction for anti-fraud experts and organizations. Davies shared examples of recent scandals where consumer trust has been deeply shaken. Most recently, Volkswagen (VW) has been dealing with the fallout from their diesel emissions scandal. Read the full recap.

Using a risk-based pre-employment screening
Previous criminal activity can be hard to find and can put organizations at considerable risk. There are checklist recommendations that usually provide a list of information sources that should be accessed during a screening — they tell you where you can find information on an applicant. But, according to Bernhard Maier, CII, director of BM-Investigations E.U., many of these lists come from the U.S. and aren't multi-jurisdictional. Read the full recap.

Attendees also enjoyed keynote presentations by Clare Rewcastle Brown, the Editor-in-Chief of the Sarawak Report and the investigative journalist who reported on the Malaysian 1MDB corruption scandal, and Mark Livschitz, a recognized AML attorney. You can find more in-depth coverage of the conference at FraudConferenceNews.com

Press Plays a Vital Role in Fighting Fraud


Investigative journalist, author of The Billionaire's Apprentice and keynote speaker at the 2016 ACFE European Fraud Conference, 20-22 March in Brussels

What role do you think the news media currently plays in combating fraud?
Bringing cases against fraudsters is simply one part of fighting fraud. The other, equally important component, is the role the press plays in making sure these cases get wide visibility. By raising the profile of white-collar fraud cases the media ensures that there is a broader, deterrent effect that extends deep into a community and often well beyond it. For instance, the widespread media coverage of the prosecution of Rajat Gupta, the three-time chairman of consulting firm, McKinsey, and a director at Goldman Sachs and Procter & Gamble, sent a powerful message to directors on corporate boards that trading in confidential information was not only punishable by law but could also lay low revered corporate icons like Gupta. He was sentenced to two years in prison and saw his reputation devastated by the case. Similarly, the media coverage of the arrest of hedge fund manager, Raj Rajaratnam--his photo as he was paraded out of his Manhattan apartment in handcuffs by FBI agents--was televised again and again. It sent shudders through the hedge fund community. Until his prosecution by Manhattan U.S. Attorney Preet Bharara, Rajaratnam was viewed as a giant in the hedge fund world and one of the most successful South Asians in America. Indeed, without the press's deep coverage of these cases, Bharara's vigorous efforts to root out fraud and insider trading may have gone largely unnoticed by the financial and corporate world, the very groups which were targeted by the prosecutions.   

What do you think most contributed to the sharing of information from Rajat Gupta to Raj Rajaratnam? 
A central tenet of Gupta's defense was that he had no reason to give information to Rajaratnam, the founder of Galleon Group, a New York hedge fund, because unlike his McKinsey colleague, Anil Kumar, he received no benefit from breaking the law. No money changed hands between Gupta and Rajaratnam. While that's certainly true, I believe there was a potential benefit that Gupta was looking to receive from his relationship with Rajaratnam. Remember at the time Gupta had stepped down from his perch at McKinsey and he was looking for a second act in life that would allow him to monetize the wealth of contacts he had amassed in his years as a corporate drone and attain the unimaginable riches that someone like Rajaratnam had. It was this possibility of great wealth--not friendship or loyalty--that prompted him to share corporate secrets with Rajaratnam. He knew that what Rajaratnam wanted was information. And if he was to play a pivotal role in Galleon International, a subject which was under discussion between the two men in the summer of 2008, it would be his skills as an information-gatherer, not as a management consultant, that Rajaratnam would value the most. I believe he began feeding Rajaratnam corporate secrets so that Rajaratnam would value him more and look more generously upon his bid to have a bigger role and a larger financial interest in Galleon International.

What do you most hope attendees will take away from your presentation titled, “Trapping the Wolves of Wall Street: How the Feds Cracked America's Biggest Insider Trading Case?”
I hope attendees will come away with a realization of the importance of routine regulatory checks and basic investigative work in cracking open big and sophisticated white-collar crime cases. When the Galleon case exploded into public view, everyone focused on the wiretap recordings that criminal authorities obtained, which provided a chilling minute-by-minute reconstruction of trading on inside information by Rajaratnam and his web of accomplices. But remember the wiretaps would have never happened had it not been for years of digging and shoe-leather investigating by a couple of dogged attorneys at the Securities and Exchange Commission. 

You recently wrote a book about the people behind the headlines. What does your book focus on, and why is this story so important to tell?
The Billionaire's Apprentice: The Rise of the Indian-American Elite and the Fall of the Galleon Hedge Fund sheds light on what motivates good people do bad things. In it, I focus on Gupta, who for most of his career led an exemplary life contributing not just to the corporate sphere but also to the charitable world. He was so respected that he was the only Indian-American invited by presidents of both political parties to dinners at the White House. What prompted a man like him in the seventh decade of his life to put aside his moral compass and cross the line? It is a deeper appreciation of the forces that pushed Gupta to transgress that is important to understanding the mindset of white-collar criminals. 

Read more about Raghavan and the other keynote speakers at this year’s ACFE European Fraud Conference. And don't forget, the last day to register early and save EUR 125 is this Friday, 19 February.