Fortinbras Risk Consultancy Ltd
Scottish IOR Conference
John J Armstrong
Leslie A Bryce
Cartwheel Conspiracy Case Study
26th October 2012
Why 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
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Discussion Points
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 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?
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The Allegation
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 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.
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What do we know?
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 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
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Risks?
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 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
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Management Response
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 Supportive of the investigation?
 Complying with legislation?
 Creating the right culture?
 Willingness to address control failures?
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Key decision points
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Who 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?
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Reputational Impact
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On the Company?
On clients?
On staff?
On shareholders?
On the regulators?
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The Suspect
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Involved
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What to do if fraud is suspected
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 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.
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Fortinbras Risk Consultancy Ltd
info@fortinbrasrisk.com
07557 994882
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