CFEs' Pledge to Protect Employees

LETTER FROM THE PRESIDENT

Fraud Magazine

James D. Ratley, CFE
ACFE President and CEO

A CEO is committing fraud. And many of the middle managers and staff members know it. What to do?

Corporate leaders have always faced pressure to tweak the ledgers to make the company goals. Since the Sarbanes-Oxley Act of 2001, organizations have implemented fraud hotlines and whistleblower protection programs to curb C-suite transgressions. However, as Bob Tie writes in Fraud Magazine's cover article, only when such resources are well-designed, implemented and managed do employees have the confidence to use them.

According to the ACFE's 2014 Report to the Nations on Occupational Fraud and Abuse, "Owners/executives accounted for less than one-fifth of all frauds, but the median loss in owner/executive cases was $500,000, approximately four times higher than the median loss caused by managers and nearly seven times that of employees." The median duration of fraud schemes perpetrated by employees was 12 months; by managers, 18 months; and by owners/executives 24 months, according to the report.

Clearly, Tie writes, organizations need to improve their employees' ability to report C-suite misbehavior. CFEs can offer guidance to employees who'll help fight fraud if they know hotlines are truly anonymous and responsive and they're convinced they'll be thoroughly protected if they come forward.

Tie quotes management consultant Warren G. Bennis: "A manager has a short-range view; a leader has a long-range perspective." 2012 ACFE Sentinel Award recipient Michael C. Woodford, then president and CEO of Japan's Olympus Corp., decided that he would be a leader and heed the fraud accusations of an anonymous Olympus employee reported in a Japanese business publication. Woodford confronted the company's board and forfeited his job. But his actions propelled the story into the media and the courts.

Tie writes that Woodford had performed well, but he wasn't born a leader. However, he became one by maintaining his integrity. "Because I was CEO of a large multinational corporation, it was much more likely that people would eventually hear me out," Woodford says in the article. "The real concern is how you make it easier to report wrongdoing for, say, a junior management accountant with three children and a big mortgage."

Indeed. CFEs' responsibilities go beyond just performing thorough fraud examinations. We have to actively encourage C-suite executives to protect employees who want to do the right thing. Our pledge to detect and deter fraud demands no less.

Read more about the fraud options of the C-suite on Fraud-Magazine.com.

A Look Inside: ACFE Asia-Pacific Conference offers speakers with stories you could only imagine

AUTHOR’S POST

Mandy Moody, CFE
ACFE Social Media Specialist

I am not going to lie; I often like to think of my life as a long, dramatic Hollywood movie (key word: think). At times, it feels like a drama (thanks to my two-year old). Other times it feels like a comedy (I am known to tell a few jokes at the expense of my friends and family). And, on the rare occasion, it feels like an incredible tragedy (a missed promotion, the loss of a friend, the realization that I cannot be “Mom of the Year” all of the time). But, for me these genres are just examples of the way my life feels; not how it is. For Michael Woodford, former Olympus CEO and whistleblower, his life over the past five years actually is like (and will soon be) a blockbuster movie. His story of exposing a $1.7 billion fraud with rumored connections to the Japanese mafia sounds like a Hollywood thriller, a thriller he will share during his keynote address at the upcoming 2014 ACFE Asia-Pacific Fraud Conference in Hong Kong, November 16-18. Hear a clip below from Woodford speaking at the ACFE Global Fraud Conference in 2012.

Woodford, however, will not be the only speaker giving an inside look at his life. Below is the full list of speakers telling their stories:

• Michael Woodford, Olympus Whistleblower, UK
  After 30 years with Olympus, Woodford confronted its Board of Directors on multiple occasions asking for answers to financial discrepancies and even delivered a commissioned PricewaterhouseCoopers investigation report. He was abruptly fired Oct. 14, 2011, by the company’s executive board because of what the board cited as a “management culture clash.” Just one month later, Olympus officials publicly admitted to the U.S. FBI and UK Serious Fraud Office to having paid fraudulent advisory fees in a decade-long cover up valuing $1.7 billion. 
• Albert Hui, CISA, CISM GCFA, GCFE, Principal Consultant, Security Ronin, Hong Kong
  Having spent years breaking and protecting information technology systems for investment banks and government and national critical infrastructures, Hui is an expert on high-sensitivity mission-critical systems security.
• David Barboza, Correspondent, The New York Times, China
  In 2013, Barboza was awarded the Pulitzer Prize for International Reporting “for his striking exposure of corruption at high levels of the Chinese government, including billions in secret wealth owned by relatives of the prime minister, well documented work published in the face of heavy pressure from the Chinese officials.”
• Paul Chung, Deputy Head of the Financial Investigations Division of Narcotics Bureau, Hong Kong Police, Hong Kong
  Chung is an AML expert with more than 15 years of experience on financial investigation and financial intelligence handling. He also has experience in handling complex fraud investigation, including boiler room fraud, franchise fraud, LC fraud, instalment fraud and insurance fraud.
• D. Bruce Dorris, J.D., CFE, CPA, CVA, Vice President and Program Director, ACFE
  Dorris is the Vice President and Program Director for the ACFE. As an Assistant District Attorney for the Caddo Parish District Attorney's Office in Shreveport, La., Dorris created and was the Director of its Financial Crimes Screening Section. He has testified numerous times before legislative committees and was a frequent lecturer with prosecutor and accountant training associations.

You can find more information about the 2014 ACFE Asia-Pacific Fraud Conference at ACFE.com/AsiaPac. Early registration ends tomorrow!

Why This Year’s ACFE Annual Fraud Conference Will Be Better Than Last Year’s

GUEST BLOGGER

Kevin Taparauskas, CFE

ACFE Director of Marketing and Events

At the conclusion of each ACFE Annual Fraud Conference, we ask attendees for feedback on the event. We get comments on nearly every component of the 2000+ attendee conference – from speaker and topic selection to room temperature to networking opportunities. We take this feedback very seriously and scour each and every response in detail. What we are really trying to learn is how we can make it better.

I like to think we do make it better each and every year. ACFE staff works tirelessly to upgrade our flagship conference to make it more valuable for our members and attendees. This year’s 23rd Annual ACFE Fraud Conference & Exhibitionin Orlando, June 17-22, is no exception.

Here are a few reasons I am convinced this year’s event will be better than last year’s:

Keynote Speakers – I am not exaggerating when I say that this year’s keynotes will be our highest-rated group on record. I have seen several of them speak and heard great things about the others. They are a dynamic group of individuals with truly fantastic stories to share.

Conference Program – Based on numerous requests, we have added a 12th track focused entirely on Professional Development. In addition, we have updated our speaker and topic lineup to better reflect our growing global presence. For the first time, many of our top speakers from our international conferences will be coming to Orlando to share their expertise.

Shuttle Services – While we aim to hold the Conference in very close proximity to a majority of the hotel rooms, some Conference locations are better for walking, dining, shopping and entertainment. Orlando is not necessarily one of those cities. We listened to attendees and are providing evening shuttle service to some great local hotspots. Whatever you can’t find on-site at the Gaylord Resort, you will be able to get to conveniently by taking a short shuttle ride.

Career Fair – While the Career Connection offers something for all attendees, whether they are looking for a job or not, this year’s new Career Fair is primarily for those looking to make their next moves. The event will be Monday, June 18 from 3:00 – 7:00 p.m. and will feature top employers from nearly every sector.

Conference App – This one is still in development so I can’t reveal too much at this point. But I will say that, beyond the basics of the Conference, our new app will be a great way to connect with other attendees and engage in social media.

Just a few months to go…see ya in Orlando!

The View from ACFE Japan on the Olympus Fraud Case

GUEST BLOGGER

Daisuke Wakiyama, CFE
President and CEO, D-Quest Inc., Vice President, ACFE Japan

The Olympus fraud case was and remains a very serious problem. Not only does it raise doubts about the transparency and soundness of the Japanese market, but it also raises questions about the reliability of the Japanese themselves. What’s devastating is not just the amount of money involved, but also the duration of the fraud -- and the fact that the whistleblower was not Japanese, but British.

Some may think, “A Japanese person would take part in fraud, but a British person would not” or, “A British CEO revealed fraud; a Japanese person could not do so.” This impression may stir a sense of distrust of the very character of all Japanese.

As you may be aware, Olympus, the global manufacturer of medical equipment with a market share exceeding 70 percent, avoided being delisted from the Tokyo Stock Exchange despite its concealment of a 100 billion yen loss. Based on the extended period of this concealment, the soundness of the company’s structure is naturally cast into question. People in and outside of Japan may look upon Olympus’ survival optimistically, but has market confidence been truly secured?

This is not something we can overlook as an isolated incident. Yet, we must keep in mind that this is a serious issue involving one company, rather than a sign of the deficient moral fabric of the nation itself and the corporate ethics/governance that shapes everything around it. We must remain vigilant to identify trends that may compromise accountability.

The interest in Olympus’ former CEO Michael Woodford may fade, but we can’t deceive ourselves into thinking that the story is over in the eyes of the world economy. Japan overall is a first-rate, advanced nation, but without a strong economy, Japan may indeed slip into the status of second-rate nationhood.

In the midst of an economic downturn, the eradication of the fraud undermining our nation and companies is critical to the structuring of a robust securities and capital market for efficient corporate activity. Amid such challenges ACFE Japan has many roles to fill and we are up to the challenge.

ACFE Annual Fraud Conference: Stories from behind the scenes

AUTHOR'S POST

Mandy Moody

ACFE Social Media Specialist

Vindication. The one word to aptly sum up the tumultuous rollercoaster ride for whistleblower and ex-CEO Michael Woodford after hearing news break yesterday that Japanese prosecutors had arrested three of Olympus’ top executives and four of its consultants for a $1.7 billion fraud.

At each twist and turn of the Olympus scandal, I have followed Woodford’s plight and watched anxiously as he has moved from accuser to whistleblower to now, crusader, in a saga that is not even close to being finished. This story, along with many others, will be just a few of the highlights at the 23rd Annual Fraud Conference & Exhibition in Orlando this June.

Woodford is one of five keynote speakers to address the more than 2,300 anti-fraud professionals at this year’s Conference. Joining him is U.S. Senator Chris Dodd, co-author of the Dodd-Frank Act; Pamela Meyer, CFE, best-selling author of Liespotting; Diana Henriques, The New York Times senior financial writer and author of The Wizard of Lies; and Mark Whitacre, convicted fraudster and subject of “The Informant.”

To add to the keynote roster, the more than 60 breakout sessions spread out over 12 tracks round out a conference offering something for everyone. Here are a few session titles to spark your curiosity:

• Open Source Intelligence (OSINT) Online and Fraud
• Ethics Panel: It May Be Legal, But is it Ethical?
• Online Fraud in the Age of “Wikileaks”
• Putting the Freud in Fraud
• The UK Bribery Act, the FCPA and the Rising Tide of Anti- Corruption
• Developing the Corporate Investigator, the First Year
• Financial Statement Fraud - Chinese Style
• Managing Client Expectations

Ok, I’ve probably already given away too much. We look forward to another exciting Conference and hope to see you in Orlando in June. Stay tuned for more updates in the coming weeks.