Former Enron CFO to Speak on Gray Areas at ACFE Fraud Conference in Dubai

SPEAKER INTERVIEW

Interview with Andrew Fastow, former Enron CFO and convicted fraudster,* and keynote speaker at the upcoming 2017 ACFE Fraud Conference Middle East, January 29-31

What are you most hoping attendees will take away from your presentation?
This is my first time to speak in this region, so I am looking forward to the opportunity. I am hoping attendees will take away that there is more than one way to think about fraud. Fraud can often occur even when people don’t realize they are committing fraud, and this is something that fraud examiners need to be thinking about. It’s not just about bribery, embezzlement and faking numbers or accounts, but about certain behaviors. I hope people will gain some insight into the behaviors that can lead to fraud.

Why do you think the Enron scandal and message you share remains relevant today?
It remains relevant because of its size and its magnitude, and also the spectacular way and speed with which it imploded. It’s scary because almost no one saw it coming. It is also particularly relevant today because of the human behaviors exhibited there; they are universal human behaviors. Some people are just better at controlling them than others. It really is a story about human nature more than a story about business. I think that’s why it resonates with people. Almost everyone is guilty of this type of behavior at varying degrees and at some point professionally or personally. A comment I often get after my presentations is, “I could think of a dozen situations I have been in where I rationalized things, and now I am second guessing what I did.”

When you are delivering your presentation and sharing your story, are you most trying to highlight the controls that were not in place or red flags missed, or do you think you could potentially sway executives to think twice before crossing blurry ethical lines?
I hope that people walk out of my talk confused. I am not there to lecture them on what the answers are. I want them to walk out thinking, “Whoa, I was thinking everything was black and white, but there really are many shades of gray.” It is not just the black area that leads to fraud, but the gray area as well.

Read more about Fastow and other keynote speakers at ACFE.com/MiddleEast.

*The ACFE does not compensate convicted fraudsters.

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