Process / Ethical Process / Ethical GovernanceGovernance

How Far Have We Gone…………….

PREVALENCE OF PREVALENCE OF FRAUDFRAUD

Fraud is a Worldwide Phenomenon!!!

Fraud may take any shape:

MEASURES AGAINST FRAUD MEASURES AGAINST FRAUD

ACTs, Rules, Regulations and Anti-Fraud Offices.

IMPACT OF MEASURESIMPACT OF MEASURES

Preventive and Reactive Measures.

FRAUD IS INEVITABLEFRAUD IS INEVITABLE

Avoid, Reduce, Share or Accept!!!

Lawsuit alleges SEC failure to perform ‘nondiscretionary’ function?

Dodd-Frank won't prevent another financial crisis?

FRAUDS ARE INEVITABLE, WHY?FRAUDS ARE INEVITABLE, WHY?

Organizations are still people dependent.

WHAT IS COMMON AMONGST WHAT IS COMMON AMONGST FRAUDSTERS?FRAUDSTERS?

Psychology!!!

VULNERABLE TO PSYCHOLOGY?VULNERABLE TO PSYCHOLOGY?

Govern the Processes!!!

LEARNING FROM THE PASTLEARNING FROM THE PAST

Have we actually learnt from the past ???

Libor Fraud; Bernard Madoff Case; Satyam Scam; Illegal gold-futures trading scam in

China; Olympus Accounting Scam or AIJ billion

dollar pension scandal of Japan;As small as Wal-Mart fraud and Toilet

Paper fraud.

PROCESS / ETHICAL GOVERNANCE PROCESS / ETHICAL GOVERNANCE

Reiterate the culture of governing the processes.

Differentiate Policies from Processes.

Ethical Governance is an integral part of Process Governance.

No one shall be spared from passing the test of Ethics.

REAL TIME INVESTIGATIONSREAL TIME INVESTIGATIONS

Lax Processes; Stringent Policies

Grant Fraud◦Whose kitty is this?

Procurement Fraud◦Use of authority for whose benefit?

Employee Retention◦Solution within the problem!

REAL TIME REAL TIME INVESTIGATIONSINVESTIGATIONS

Flexible Policies; Stringent Processes

Robust Hiring Process◦Too strong to be broken.

Cash Rich Industry◦No one at fault.

Personality Clash◦Importance for the organization.

MISCELLANEOUS – REAL TIME MISCELLANEOUS – REAL TIME INVESTIGATIONSINVESTIGATIONS

Termination due to managements’ fault

Fake identities

Indirect undesirable associations

Operating in Gray Areas!!!

Even as global literacy rates are high (84%), people are reading less and less

deeply.

FRAUD AND PSYCHOLOGYFRAUD AND PSYCHOLOGY

Personality Test – Pre / Post Fraud?

Personality Test

MONITOR THE MONITOR - MONITOR THE MONITOR - WHO?WHO?

Abuse of Authority is a type of Faud!!!

Peregrine Financial Group ◦ ‘With careful concealment and blunt authority, CEO was able to hide fraud

from others.’

Rajat Gupta – it was greed for more◦ Who checked him not to divulge?

JP Morgan ◦ Firm's handling of trading in synthetic credit securities was “flawed,

complex, poorly reviewed, poorly executed and poorly monitored.”

Bank of America's user authentication scam◦ Weakness in the banks KYC system.

PROCESS/ETHICAL GOVERNANCE – OTHER ASPECTS OF PROCESS/ETHICAL GOVERNANCE – OTHER ASPECTS OF LIFELIFE

Follow a routine to live long.

Work – Life Balance.

Fight against evil in society.

Struggle or strive for goals.

Make it a

TAKE-AWAYTAKE-AWAY

Don’t distrust key people – Govern them!!!

QUESTIONS and ANSWERS…………..