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Scottish IOR Conference
John J ArmstrongLeslie A Bryce
Cartwheel Conspiracy Case Study
26th October 2012
Fortinbras Risk Consultancy Ltd
Insert Slide TitleWhy it is important
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“Our vision is that...there is a very clear lead from the top of financial organisations – that fraud is a significant threat that needs managing strategically and effectively. In considering fraud issues we will look, for example, at whether a firm has a strong anti-fraud culture, with the lead being given from the top.” Philip Robinson former FSA director of financial crime
Insert Slide Title Initial Allegation – how do you react
Is your organisation equipped to handle it?
Management Response Communication Company Policy
Key Decision Points Investigation Disciplinary Actions Civil and Criminal Proceedings
Reputational Impact
Anything else?
Discussion Points
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Insert Slide Title A whistle-blower has made contact to allege:
Long-serving member of staff has stolen large amounts from the company in the form of fraudulent claims payments.
In particular, payments have been made to an ex-boyfriend and other friends.
One cheque for around £28,000 recently sent to a D Pritchard.
Works in Southend but originally from Liverpool.
The Allegation
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Insert Slide Title Suspected fraudster has 16 years service, mainly in the
claims function Expert knowledge of certain claims systems Trains new staff Claims payment authorisation of up £50,000 Family members work for the company Liked by staff, generous and heavily involved with local
charities Initial investigation has found a cheque payment for
£28,275 to D Pritchard with no apparent connection to the associated claim
What do we know?
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Insert Slide Title False allegation
Mishandling of the case resulting in failure to recover any losses
Reputational risk to the company from bad publicity
Potentially unidentified control failures in the claims handling and
claims payment systems
Risks?
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Insert Slide Title Supportive of the investigation?
Complying with legislation?
Creating the right culture?
Willingness to address control failures?
Management Response
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Insert Slide TitleWho investigates?
Who is told about the investigation and when?
Who makes the decision on civil and/or criminal proceedings?
Who handles the legal aspects?
Who handles external communication?
Key decision points
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Insert Slide TitleOn the Company?
On clients?
On staff?
On shareholders?
On the regulators?
Reputational Impact
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Insert Slide TitleThe Suspect
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Insert Slide TitleInvolved
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Insert Slide Title Do not voice your suspicions to anyone who does not need to know.
This could be deemed to be ‘tipping off’ and is a criminal offence Do not challenge the individual Contact the appropriate investigation function as soon as possible Secure or photocopy relevant documents in your possession.
However, if fingerprints are a factor, avoid touching the documents
Document any relevant conversations Do act quickly to minimise risk Act normally
Remember! Employees who suspect fraud and do not report through the appropriate channels can be prosecuted personally under the Proceeds of Crime Act 2002.
What to do if fraud is suspected
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Insert Slide Title
Fortinbras Risk Consultancy [email protected]
07557 994882
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