Dr. Neil Whitehouse • Fraud prevention and the various legislation regarding fraud prevention can only be a red herring so to speak. The reason no one can resolve this problem is simple because industry in general is not addressing the root cause of fraud.
The root cause is the staff within the various organizations. The question that needs to be answered is: How do we detect the criminal elements of the people we hiring?
Larry, was talking about personal values and we cannot stress how important personal values are, yet they are totally ignored in the recruitment process. To think that we can determine these dishonest tendencies in people through resumes and interviews is a pipe dream, yet we continue hiring in the dark, giving the fraudsters a foothold to operate within an organization.
If we want to have any chance at reducing the costs and solving the fraud and corruption syndrome, which is costing the economy billions of dollars per year, we need to address the source and plug the undesirable characteristics operating within the organization.
All the regulations in the world will not solve the problem as internal fraud can go undetected for years, the reason being that the criminal elements are organizing syndicates within the organizations.
We have just uncovered a syndicate within an organization, which could not be detected by the normal preventative measures. In this instance it was the head of security who was the leader in the syndicate. He was also part of the team trying to resolve the criminal element within the organization.
He had the general manager, chief auditor, the distribution manager in his pocket and as the Head of Security orchestrated the whole operation. Management tried to plug the hole using a polygraph but failed to do that.
This investigation done through our Functional Audit was discovered and identified within a two week period from start to finish.
This is a stunning example of the power of the Functional Audit program and I will be running a Webinar explaining the complete logistics and the results of the audit within the next couple of weeks.