Anti-Bribery Expert Says Corruption at FIFA Entrenched for Decades

GUEST BLOGGER

Sarah Hofmann
ACFE Public Relations Specialist

Hundreds of anti-fraud professionals from Europe will gather in Brussels, March 20-22 for the 2016 ACFE European Fraud Conference, where they will hear from president and founder of TRACE International, Alexandra Wrage. She hopes that she can shed some light on corruption and compliance issues around the world, including those affecting football’s governing body.

As both an anti-corruption expert and a former member of FIFA’s Independent Governance Committee, Wrage believes not much could have prevented the FIFA scandal that continues to unfold. She said, “The problems at FIFA were so widespread and so broadly accepted, that I am not sure anything could have been done to prevent the corruption. The problems, and especially the sense of entitlement, had been entrenched for decades. It’s possible that the corruption could have been stopped earlier if the sponsors, the Swiss government or the enforcement agencies had stepped in sooner. But for years, it seemed that Mr. [Sepp] Blatter and his friends were almost untouchable. They exchanged favors, made secret deals, funded their own extravagant lifestyle … all at the expense of the sport they were meant to protect and promote.”

Alexandra Wrage, President of TRACE International

At the conference, she will share her thoughts on not only the FIFA scandal, but important issues she sees through her work at TRACE International regarding global anti-bribery standards and the importance of setting the right tone at the top when implementing controls to prevent corruption. Wrage said a common challenge she sees is, “The sense at headquarters that nothing can be done because bribery is simply unavoidable in some countries. I certainly don’t believe this and your local employees won’t thank you for that sort of pessimism. They’re living with corruption every day and the head office should be backing them up, providing tools and training and helping them to avoid extortionate demands.”

She will be joined at the conference by other keynote speakers including award-winning investigative journalist and acclaimed author Anita Raghavan, Chief Commissioner of the Belgian Federal Police Johan Denolf, Head of the Security Division and General Services Division, International Court of Justice Maarten Daman, Attorney Mark Livschitz and Deputy Training Director of the Association of Certified Fraud Examiners Liseli Pennings, CFE.

Breakout sessions will include discussions about cybercrime, bitcoin and how linguistic and cultural influences can be used to fight against money laundering. This conference will give attendees an opportunity not only to hone their techniques, but also network and build relationships with other anti-fraud professionals.

Don’t miss your chance to hear from experts on today’s most pressing fraud and corruption issues. Register now for your chance to attend the 2016 ACFE European Fraud Conference in Brussels.

Fraud Fighters are Tackling a Pandemic

FROM THE ACFE MIDDLE EAST FRAUD CONFERENCE

By Emily Primeaux
Assistant Editor, Fraud Magazine

"In case you haven't noticed, and I'm sure you have, fraud has become pandemic around the world," said Jeffrey Robinson, bestselling author and international expert on organized crime and fraud, in his keynote session at the 2016 ACFE Fraud Conference Middle East in Dubai, February 14-15. "I mean seriously, it has become pandemic. If fraud were a disease, political leaders of all our nations would have to declare a global health emergency."

And why has fraud spread like this? According to Robinson, it's not getting the attention it should. "If you are Bernie Madoff and you've stolen 50 billion dollars, yeah, that does get an awful lot of attention." But it only garnered attention after the fact — after $50 billion had been stolen and even though the clues were there all along.

"The problem is that except for you guys, the ACFE, no one's really paying attention to it." Robinson went on to highlight law enforcement's priorities. The No. 1 priority for law enforcement is terrorism, then drug trafficking, followed by firearms and then sex offenses. "Yet fraud, if you put a monetary value on fraud, it's second only to drug trafficking of all the crimes. It's right up there with drug trafficking. But it's really far down on the list of crimes that get investigated."

But people aren't reporting fraud either. Businesses that get hit by fraud feel embarrassed and don't want to report it to their shareholders. Individuals that suffer a loss from fraud feel violated or stupid, and decide to forget about it because of the feeling of foolishness for allowing it to happen in the first place.

Robinson referred to this as a "two-way street crime." For a fraudster to be really successful, the victim has to cooperate in some way, and that's why victims "feel so stupid." For example, take a victim of a hacking that used the word "password" as their password. They've easily set themselves up to become a victim of fraud.

Robinson explained that the best defense any company can have when it comes to fraud is total transparency. Remove the theory of "unshareable problems." Pay attention to your employees. Help them. Tell your people that you're going to share in their problems.

Robinson finished by expressing the value of fraud fighters. "If it weren't for you — and I am so high on this organization, because you're really the only people standing in the way of the fraudsters and havoc — if it weren't for you asking at every turn ‘How come nobody died?' the 21st century is guaranteed to belong to the fraudsters. You're my heroes."

Read more about the first-ever ACFE Middle East Fraud Conference on Fraud-Magazine.com.

The Power of Addressing the Human Element of Fraud

FROM THE ACFE MIDDLE EAST FRAUD CONFERENCE

By Emily Primeaux
Assistant Editor, Fraud Magazine

Under the kind patronage of His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, the Deputy Ruler of Dubai and Chairman of the Financial Audit Department, and hosted by the FAD of Dubai, the inaugural ACFE Middle East Fraud Conference brought together more than 400 anti-fraud professionals to learn the latest anti-fraud techniques and tools.

Featured speakers at the event, February 14-15 in Dubai,  included Prof. Dr. Marco Gercke, Director of the Cybercrime Research Institute; Jeffrey Robinson, author and international expert on organized crime and fraud; and Hamed Kazim, CEO of HK Consulting. Concurrent sessions focused on the global nature of fraud by teaching attendees how to address cybersecurity risks in the Middle East, taking fraud examinations to other countries, and how to navigate global expectations for addressing fraud risk and the investigative process.

During the first keynote presentation, Hamed Kazim spoke about the importance of tackling what he calls the "common denominator" of fraud: the human being. While we live in a world that's filled with huge global challenges, including the impact of technology on our lives, businesses and governments, the human element shouldn't be ignored.

"When you look at the resources dedicated to addressing the human element, it's minimal in comparison," said Kazim. "We spend billions of dollars globally on fraud detection, on professionals, on technology, etc. … But it all boils down to that human being."

Kazim used an example from his own experience. He heads the audit committee for his organization, so he commissioned the internal audit team to use data analytics to compile data from the past 10 years to look at fraud findings. The results showed that 70 percent of fraud was committed by people that shouldn't have been hired in the first place, so they implemented new steps into the organization. Kazim said they began emphasizing the induction of entry-level employees with much more scrutiny beyond the norm; he advised that other organizations go beyond normal reference checks in the hiring process.

It doesn't stop at the hiring process, though. Kazim said you have to monitor employees' behavior and performance during their careers, and you have to create a culture of healthy awareness in your organization. Make it easier for people to report tips or to blow the whistle on fraud.

Kazim also discussed the importance of how companies handle budgetary constraints or budgetary cuts, especially when it comes to employee layoffs. "The way you go about laying off employees can make a huge difference," said Kazim. "You're either upfront to your employees and you tell them, ‘We're going through an economic recession, we have to tighten our belts, and that's how we're going to go about it, in a very transparent way.' Because if you don't actually handle it well, it will demoralize the staff. When you demoralize the staff, what will happen? Productivity will drop and the incentive for creating fraud increases substantially."

Kazim wanted attendees to takeaway these key points from his presentation: It's important to focus on technology. It's important to have firewalls, to have fraud detection systems, to have awareness, etc. "They're all important, I'm not taking away the importance of having these functions," said Kazim. "But we have to go back to the basics. Focus on the single most important element in these things, and that's the human aspect."

Read more about the first-ever ACFE Middle East Fraud Conference in the full article on Fraud-Magazine.com, and register today for the 2017 ACFE Middle East Fraud Conference.

Also, read news coverage from the conference:

Fraud incidences go up substantially during slowdown, recession 
Gulf News | 14 February 2016

Speakers discuss fraud prevention techniques 
Khaleej Times | 15 February 2016

Empower supports global integrity, transparency 
The Gulf Today | 14 February 2016

Press Plays a Vital Role in Fighting Fraud

INTERVIEW WITH ANITA RAGHAVAN

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.