You Discovered Fraud — Now What?: A #fraudweekchat Recap

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Courtney Howell
ACFE Community Manager

This year during International Fraud Awareness Week, we hosted our first ever Twitter chat with the topic “You discovered fraud — now what?” Participants shared excellent advice on what to do if you or someone you know discovers a potential fraud. A few discussion contributors even shared real-life experiences they have learned from.

Read on to discover some of the top insights shared during the chat, and be sure to follow us on Twitter!

See all the responses to Q6 here. 

Thank you so much to everyone who participated, liked and shared our #fraudweekchat tweets. If you’re interested in seeing more Twitter chats hosted by the ACFE, please let us know in the comments or, of course, you can always tweet at us.

Persistent Whistleblower Works to Expose VA Health Care Fraud

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FROM THE PRESIDENT

James D. Ratley, CFE

I've met many whistleblowers in my time, and what’s always resonated with me is that they persist despite nearly impossible odds. Dr. Sam Foote, a physician with a genius mind and audacious spirit, persisted when he found himself facing Goliath: the Phoenix Veterans Affairs (VA) Health Care System. When scandal rocked the department in Arizona, he didn’t back down.

In 2011, Foote penned his first letter to the VA Office of the Inspector General (OIG) to report waste, fraud and abuse by Gabriel Perez, then-director of the Phoenix VA. Foote had heard rumors that Perez’s mismanagement of funds had put the hospital $12 million in the hole. The national inspector general for the VA investigated the allegations that same year and Perez retired while inquiries were underway.

Any whistleblower would sigh with relief at this point: The OIG listened, the alleged fraudster was ousted, and now Foote and the hospital could move on. However, during Perez’s tenure, seven physicians left the hospital, and he never replaced them, which left the hospital with a provider shortage.

In 2012, Sharon Helman, who’d previously served as director of the VA hospital in Hines, Illinois, joined as head of the Phoenix VA and nearly a year later was reporting a decrease in patient wait times. But in the next year, Foote discovered secret patient wait lists. “In April of 2013, they [Helman and senior staff] made two lists: They made one electronic list that they would take on and off about 150 names that they actually reported to central office,” says Foote in Fraud Magazine's latest cover article. “Then they had another electronic list that did not report to central office.” Helman and the other administrators were claiming bonuses for decreased wait times — and patients were dying while waiting for care.

Foote again brought his concerns to the attention of the VA OIG, but this time he faced some resistance. He then sent letters to several government officials, including Sen. John McCain, R-Ariz. Eventually, the office of then House Rep. Jeff Miller, R-Fla., the chairman of the Committee on Veterans’ Affairs, responded. Miller put Foote in touch with a CNN producer, and on April 23, 2014, CNN broadcast an interview with Foote, and the story went viral.

Thanks to Foote’s tenacious efforts, further investigations would reveal that 293 veterans died while waiting for care. Multiple high-ranking officials, including Helman, have been placed on administrative leave or fired. And Foote continues to speak out as the VA saga continues.

At the 28th Annual ACFE Global Fraud Conference in Nashville, Tennessee, this past June, Foote received the 2017 Cliff Robertson Sentinel Award “for choosing truth over self.” He might have taken on Goliath, but just like the result of that epic battle, Foote is taking down the giant.

Saints or Sinners: Whistleblowers' Difficult Position in the Asia-Pacific Region

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FROM THE ARCHIVES

Sarah Hofmann
ACFE Public Information Officer

Whistleblowers can be divisive characters. Celebrated by some as heroes and denounced by others as snitches, few other elements that come up during a fraud investigation can spark such polarizing labels. During her session at the 2016 ACFE Fraud Conference Asia-Pacific, Jessica Sidhu, CFE, Llb, explored the precarious position whistleblowers are in. “Is a whistleblower a good person or a bad person? Is he a traitor or is he a patriot?” she asked the audience. “Only when you’ve answered this question will you be able to take a whistleblower seriously.”

The topic was especially pertinent to discuss during the conference in Singapore, as the government of neighboring Malaysia has been involved for a few years with the 1Malaysia Development Bhd (1MDB) scandal. Global investigators believe that millions of dollars from the state investment fund 1MDB entered Malaysian Prime Minister Najib Razak's personal bank accounts.

Sidhu herself was formerly head of administration and finance at the Malaysian Attorney-General's Chambers (AGC) and was involved with a special task force investigating various financial cases, including a probe into 1MDB. She was reportedly fired “suddenly” in late 2015 and had her permanent residency revoked by the Immigration Department of Malaysia.

During her remarks at the conference, Sidhu discussed Andre Xavier Justo, a former PetroSaudi International executive who is believed to be the main whistleblower in the 1MDB case. He allegedly leaked documents to independent media site Sarawak Report, which established a link between Prime Minister Najib and the missing funds from 1MDB. Justo is currently in jail but is expected to be pardoned at the end of 2016.

Sidhu explored the challenges that whistleblowers face from the very first decision they make: whether to tell someone what they know or suspect. She said, “Sixty-five percent of whistleblowers are insiders and eighty percent of them have approached [their bosses or oversight bodies] internally, but were rejected or turned back.”

It is common for even the most well-intentioned investigators to ignore or discount the reports of whistleblowers for a variety of reasons. Sidhu described a situation her team experienced where one male employee made multiple reports against a female coworker for suspected fraud. Each report was investigated; however they were unable to find any evidence to back up his claims until the tenth report.

Read the full article in The Fraud Examiner, the ACFE's monthly newsletter, archives on ACFE.com.

Setting the Tone at the Top with a Robust Whistleblowing Policy in Africa

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Mustafa Yusuf-Adebola, ACCA
Risk Consultant

In late 2016, the Nigerian government introduced a whistleblowing policy that awarded individuals between 2.5% to 5% of the amounts recovered based on information about violations of financial regulations, mismanagement of public funds and assets, financial malpractice, fraud and theft. Within a three-month period, the government received 282 tips from whistleblowers through:

  1. Text messages (34%);
  2. Phone calls (31%);
  3. Emails (18%);
  4. A whistleblowing portal (17%).

While 55% of these tips were actionable, the medium of communication whistleblowers chose gives an indication of what Nigerians are more comfortable with.

Until recently, whistleblowing was not seen as a serious and viable detection technique in Africa. Whenever one brought up the topic, it sounded like a textbook term used only for academic purposes. Though codes of corporate governance, regulations and international affiliations forced a number of companies to have a whistleblowing policy, in the companies I reviewed I noticed what accountants call ”substance over form.” Essentially, the regulatory (or affiliate) substance of having a whistleblowing policy overrode the working form.

Regarding the tone at the top, the government’s policy has made the whistleblowing immersion and enlightenment a more engaging discourse. “I am going to blow the whistle” is now a popular phrase within the country and people use the whistle as a metaphorical expression of reporting wrongdoing.

The publicity of this policy has also spurred discussions concerning the protection of whistleblowers, rewards for whistleblowing and punishment for false reporting. Similarly, there have also been questions raised on the safeguarding of tips provided by whistleblowers to ensure they are not leaked by those who receive or work on these tips (thus making the whistleblower appear like a false informant). In response to some of these concerns, the country’s senate passed a Whistleblower Protection Bill last June.

As these discussions gain traction, organizations in the private and public sectors are now either introducing whistleblowing policies or reviewing existing ones. Recently, I have observed more Nigerian companies having a whistleblowing link on their websites while some publicize the existence of these portals on their social media pages.

Despite all of these changes, it is important that companies do not just have whistleblowing policies in place but the top hierarchy display and are seen to display a strong commitment to act ethically in order to encourage a whistleblowing culture whose “form supersedes its substance."

 

Nordic Compliance Professionals Prefer Web-Based Whistleblowing Channels

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Karin Henriksson, Founding Partner of WhistleB, Whistleblowing Centre
Whistleblowing and compliance expert

For many years, telephone hotlines have been considered the most popular form of reporting whistleblowing issues. However, WhistleB’s recent client experience in Scandinavia has indicated that reporting through online channels is equally effective.

Research conducted by the ACFE seems to corroborate this trend. For the first time, tips submitted via email (34.1%) and web-based or online form (23.5%) combined to make reporting more common through the internet than by telephone.

Against the backdrop of increasing regulation across Europe aimed at strengthening whistleblower protections, we were curious about the potential of online whistleblowing systems, based on the experience of Nordic organizations.

At the 3rd Summit on Anti-Corruption (Nordics Edition) in November 2016, we took the opportunity to ask compliance professionals directly about their preferences of whistleblowing reporting. Here is what we found:

  • Nearly 80% of respondents receive the majority of their whistleblowing reports through a web service.
  • More than three-quarters of compliance professionals surveyed said they preferred to receive reports through a web service, whereas only one in 10 preferred to receive them by phone.
  • Nearly 70% said that they manage whistleblowing cases internally; approximately 30% handle them both internally and externally.

We also surveyed our own customers during the summer of 2016. The request went out to approximately 100 organizations who told us that approximately half of the reports they received led to an anonymous dialogue between the whistleblower and the employer.

What can we learn from these results?

  1. The anonymity and security of web-based reporting channels appeals to whistleblowers, for whom blowing the whistle remains an uncomfortable step to take. Additionally, web platforms that are increasingly optimized for smartphones enable whistleblowers to more easily record and report evidence of misconduct.
  2. We believe that one of the key reasons that compliance officers prefer online reporting systems is that an online system enables them to capture information more efficiently, and subsequently handle cases more effectively with the help of a structured online process. 
  3. Nordic companies clearly prefer an internal investigation team, and the advantages thereof: the ability to extract and combine information from multiple reports and sources to find a pattern; more secure handling of information; and, cost-effective solution.
  4. Online reporting is invaluable in bringing about anonymous internal dialogue between the organization and the whistleblower.

Online whistleblowing has a firm position in the prevention of fraud. As one of our customers wrote in our summer survey, "We see that reporting increases when the employees can report with guaranteed anonymity and in their own language."

Karin Henriksson, Founding Partner of WhistleB, Whistleblowing Centre is a whistleblowing and compliance expert. Karin has previously worked in the European Union bodies, as well as at the Nordic Council of Ministers. She has for many years worked as a senior consultant in the area of ethics and compliance, helping customers set up whistleblowing centers as a part of their governance and compliance model. She is also a member of Transparency International’s whistleblowing group in Sweden.

Skype: WhistleB Karin Henriksson
E-mail: karin.henriksson@whistleb.com