The Prevention of Corruption (Amendment) Bill of 2018 brings about a change in a 30 year-old law defining and penalizing corruption in the Indian public system. The newly introduced law aims to provide a more comprehensive definition of bribery. To a country ranking 81 out of the 180 countries on Transparency International’s Corruption Perception Index, and with its complex regulatory procedures and tax systems, it is not uncommon for an organization to encounter an unfavorable situation with a public official.Read More
Corrupt politicians are a common trope in society, but what's more uncommon is how to spot the red flags of shady dealings. Breakout speaker Michael Schidlow, CFE, CAMS-Audit, head of financial crime risk training and emerging risk advisory at HSBC Bank, took attendees at the 29th Annual ACFE Global Fraud Conference in Las Vegas last month on a ride through the world of political corruption combining pop culture references with infamous real-world examples involving names like Gaddafi and Putin.Read More
FROM THE PRESIDENT
James D. Ratley, CFE
Sports are an obsession for many fans around the globe. Team owners, promoters and gear manufacturers know their customers are loyal (sometimes rabid), unpaid publicists. So we're talking about boatloads of cash coursing through sport systems — and sometimes surreptitiously into fraudsters' pockets.
Andrew Jennings, an independent investigative journalist, has spent more than 15 years laboriously examining the economic intricacies of FIFA (Fédération Internationale de Football Association). His reporting of entrenched FIFA corruption — bribes, kickbacks, vote rigging and ticket scandals — eventually caught the attention of the FBI. In 2015, the U.S. Department of Justice indicted scores of FIFA-related officials under the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act and the U.S. Travel Act. As of publication, the U.S. had convicted 21 on various racketeering and corruption charges with 42 defendants publicly charged.
Simon Jenkins of the Guardian newspaper wrote that credit for the routing of FIFA "should go to the dogged obsession of a single reporter, Andrew Jennings."
Jennings has been chasing bad guys around the globe for decades. He's investigated corruption in Scotland Yard, the Sicilian Mafia and the International Olympic Committee, among many others.
The inscription on the ACFE's Guardian Award reads: "For Vigilance in Fraud Reporting." That phrase defines Jennings's work. And that is why we're presenting him with the award at the 28th Annual ACFE Global Fraud Conference, June 18-23 in Nashville.
Jennings says that from his teen years, he wanted to become an investigative reporter. He attended university for a couple of years, but he was chomping at the bit to get to his investigations. He worked for some of the U.K. national newspapers, but he was bored. He went to the BBC where he worked on a TV documentary about corruption in Scotland Yard, but the BBC pulled it at the last moment. He quit and went home to write a book about it. And then a public-affairs TV show — "World in Action" — called him and he re-made the film.
From there he made several documentaries and wrote a couple of award-winning books on Olympic corruption, which prepared him for rooting out "the rot," as he calls it, in FIFA.
Even today, at 73, he's still sniffing for bad smells in large institutions. Read more about Jennings in the latest issue of Fraud Magazine.
And, sign up for the 28th Annual ACFE Global Fraud Conference to hear this fascinating man and many other fraud fighters.
Unaoil, a Monaco-based oil consulting company, was recently exposed in a media investigation for potentially supporting or facilitating bribes on behalf of large multinational firms in the oil and gas industry. Though the company is from Monaco, Unaoil is believed to have supported companies in winning contracts across Middle Eastern and African countries. The investigation, which Fairfax Media and The Huffington Post conducted, identified several emails providing references to the routing of bribes.
The Unaoil case provides several lessons on using forensic email reviews to help gather evidence or indications of fraud, misconduct and regulatory non-compliance. Investigators who use these reviews rely on communication as a raw form of evidence that exhibits subjects' unethical or illegal intent. Keyword searches are an effective method of identifying evidence in the huge volumes of data stored in digital devices. Investigators choose keywords based on context and relevance to the case.
An analysis of the evidence gathered by Fairfax Media and The Huffington Post on the Unaoil case reveals a number of lessons on forensic email reviews for investigators.
Using code words in communication
Many of the leaked Unaoil emails and excerpts contain several code words referring to individuals, organizations, events and the contexts of the communication. Individuals are referred to as "Doctor," "Ivan," or "Lighthouse." Keywords can help disguise intent in communication. For example, bribers or bribe receivers (public officials) might not be red-flagged in email if they identify themselves by code name or keyword.
Of course, these reviews wouldn't be effective unless investigators are aware of the keywords subjects are using because generic keywords might show inconsistencies.
Investigators should look for:
- Data (files created, system logs, etc.) and communication (email and chat logs) pertaining to a specific time period (a month, quarter or a year that's relevant to the incident or the issue in question).
Dissecting the chain of events
The leak in the Unaoil case included emails referencing the opening of a separate bank account to channel funds; a request for depositing funds into an unknown, third-party, offshore account; and a payment rejected by a bank, which noted the transaction "may conflict with U.S. government sanctions." In that case, the rejected payment was subsequently cleared by the bank.
Automated communications from a banking channel on payouts or deposits might be ignored assuming they're irrelevant. However, if someone attempts to place some of these transactional communications into the overall chain of events relating to the issue or the incident in question, it helps in identifying relevant evidence on a violation or misconduct. Such communication might not contain any of the keywords (including names of key people) that are considered in the review.
When looking at the chain of events, investigators should consider the following three key factors:
- Inconsistent nature of received communication.
- Unusual patterns of communication and the use of "Bcc:" in emails.
- Communication representing financial transactions or financial manipulation.
These outliers help put together events and look at them from a bird's-eye view. Looking at the chain of events in this way enables the investigator to identify potential red flags. For instance, a Bcc: communication might show that the perpetrator intended to involve the subject in the blind copy field without the receiver knowing it.
Forensic email reviews help uncover clues
Organizations should consider using forensic email reviews in new ways to uncover information to understand key players' communication patterns, including what and with whom they communicating, and files they're sending and receiving. If you conduct this type of analysis on each individual for an isolated sample period you might identify specific keywords.
These reviews should extend beyond keyword-based searches to examine communication among identified individuals, time-period-based information exchange, inconsistent/unusual patterns or nature of communication, and any suspect references to financial transactions and manipulation.
The Unaoil case demonstrates how you can use these tactics in forensic email reviews to help unravel large-scale, complex fraud schemes and discover communication patterns, preserved digital evidence and, most importantly, fraud perpetrators' own words — saved for posterity.
Read the full article, with even more tips for reviewing emails, at Fraud-Magazine.com.
Sundaraparipurnan Narayanan is the associate director of forensic services at SKP Business Consulting LLP. His email address is: SNarayanan@skpgroup.com.
Dennis Lawrence, CFE, CAMS
Lawrence is a Denver-based risk consultant.
Bitcoin’s value in the criminal underworld continues to rise. Although well known as the preferred payment method on the Deep Web for illegal goods and services, the digital currency has attracted the attention of increasingly shadowy figures seeking to anonymously transfer funds. ISIS advocates its use for terrorist financing, and kidnappers seeking ransom payments have even begun demanding bitcoins instead of cash. Given its popularity amongst wrongdoers, discussions surrounding the role of digital currency in the multi-billion dollar business of bribery are curiously absent. Silence on the issue is perhaps all too ironic since the threat has never been greater for bribes to be both covertly delivered and hidden indefinitely from the eyes of investigators, forensic accountants and financial institutions.
In principle, Bitcoin transactions are far from untraceable. All transfers of currency are recorded in a public ledger called a blockchain, but only randomly generated Bitcoin addresses comprised of numbers and letters are logged… not names or identities. Many wallets containing Bitcoin addresses which are used for receiving, storing, and sending bitcoins also record IP addresses and require the uploading of personal identification documents. However, these security measures can be easily sidestepped by any determined individual with enough imagination. A few wallets purposely refrain from collecting any identifying information at all in order to appeal to specific audiences.
In order for a transaction to be traced to a person, investigators must figure out a way to tie an individual to a Bitcoin address. At present, users are able to transfer money without revealing their identities so long as they understand how to effectively operate the anonymous web browser Tor, certain wallets and exchanges, Bitcoin ATMs, and web applications such as Bitcoin Fog or Dark Wallet. These tools collectively subvert the digital currency’s traceability by disguising the true origin and destination of Bitcoin transactions. Paranoid users can even resort to private in-person meetings with local traders who exchange cash for bitcoins at a small fee with no questions asked.
So how can Bitcoin be leveraged in the payment of a bribe? Read the scenario below.
A construction company agrees to bribe a city official in exchange for facilitating the award of a lucrative public works contract. Given the high stakes involved, the bureaucrat wants no incriminating evidence that could potentially be uncovered in an investigation. After careful discussion, the parties arrive at a mutually agreeable solution.
In light of the construction industry’s common practice of paying certain workers in cash, a weekly purchase order request begins to be submitted at the company which describes compensation for day laborers. At the direction of executives, a trusted manager pays cash for a used laptop that he connects to a downtown coffee shop’s public Wi-Fi network during his lunch break in order to set up several Bitcoin wallets. He decides on an anonymous wallet or perhaps a Chinese wallet since they are the most unlikely to cooperate with Western authorities in the event of a subpoena. Shortly thereafter, the manager starts making weekly deposits of $5,000 into his wallet via anonymous Bitcoin ATMs . Using Bitcoin Fog on the Deep Web, the manager transfers $20,000 in cash per month to the city official who keeps the money hidden online in his wallet. Once a quarter, the bureaucrat travels abroad to cash out his small fortune using local Bitcoin traders and Bitcoin ATMs, partaking in luxury vacations and spending sprees. After the entirety of the $250,000 bribe has been paid to the city official, the construction manager physically destroys the laptop and never accesses the Bitcoin wallets again.
As illustrated, bribery using Bitcoin offers numerous advantages and few methods of detection. Even if a whistleblower were to come forward to disclose general details of the scandal, investigators would almost certainly hit a dead end. And in the unlikely event that authorities knew Bitcoin was somehow involved, where would they even start? It would be nearly impossible to establish a trail of evidence that could adequately serve as a basis for criminal prosecution or civil action. At worst, the construction company would receive a slap on the wrist for paying day laborers in cash.
The reason why we haven’t heard more about the involvement of Bitcoin in bribery schemes might be due to fraudsters not yet realizing the full potential of digital currency. Or perhaps, it’s because many investigators remain unaware of the extent to which it has already been used as a tool for bribery worldwide.