Blackmail Fraud 2.0

In my post of March 25 I lamented the distressing development of what I termed Blackmail Fraud. This phenomenon of “non-terminability” or “immunity from termination” is best illustrated by the topical case sited below.

WASHINGTON—

Zimbabwe’s leading platinum-mining firm, Zimplats Holdings, allegedly used an offshore company to pay salaries for senior managers in violation of exchange control laws, according to documents leaked from a Panamanian law firm. Read article..

Assuming that what is reported to have happened here did indeed occur (well, there’s no smoke without fire), then such a practice could ‘ve only been done by and/or at the behest of the C-Level management. Now, assume further that it was the Accountant in charge of the “Executive Salaries” function who would handle the transactions. Would he be touchable or indeed terminable of he, well, helped himself to some payroll funds. Wouldn’t the board have preferred a rather hushed solution to this scam had it come to their attention before these nosy journalists!

 Gudo picuringOur summary advice is:

(a) Tone at the top.
(b) Making certain Internal Controls are operating as they should at all times. This calls for an independent monitoring function.

(c) Periodic Fraud Vulnerability Review (also known as Fraud Risk Assessment) which follow the pretence of “prevention is better than cure”. Here experts assist with the process of risk analysis that proceeds from threat assessment to threat evaluation to the selection of countermeasures designed to contain or prevent that risk.

(d) Effective, conclusive investigations where a fraud is suspected or detected.

About 5wh Audit

5wh is a relationship-oriented professional services company that provides the following solutions to business challenges:
Ø Internal Audits
Ø Forensic Audits
Ø Compliance Audits
Ø Due Diligence Investigations
Ø Business Systems Design, Development and Reviews

We work with business owners and leaders who are set on blowing away those constraints blocking their way to success. We also assist our clients isolate hidden economic assets in their business and determine specific projects to optimize and leverage those assets for greater profit and growth.

We know that the only way to turn your potential for success into actual success is to blow away the constraints that block your path.
________________________________________
© Caleb Mutsumba

 

 

 

Advertisements

What do you think? What strategies do you, or your company, use to manage the risk of fraud and error in your organisation? Are you primarily proactive or reactive in your approach to risk management? Share your experience in the Comment box below.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s