THE ISSUE: Keeping corruption, fraud in check

THE GLOBAL ECONOMIC recession has resulted in increased bribery, fraud and other forms of corruption internationally.
And as difficult economic times persist in Barbados, increased attention will have to be paid to preventing, uncovering and punishing white collar crime.
In the November 14, 2011 BARBADOS BUSINESS AUTHORITY, a regional accounting expert advised businesses to be proactive in combating occupational fraud.
Dr Robertine Chaderton, a senior lecturer in the Department of Management Studies, University of the West Indies, Cave Hill Campus, said it was critical for companies to have internal controls specifically designed to prevent and detect fraud.
 “There should be a code of ethics for both management and employees and that is something that I find is only now slowly creeping into organizations in the Caribbean,” she said.
Chaderton noted that while some companies make employees sign on to a code of ethics when they are hired, they never remind them of it.
“My recommendation is that they should be reminded of it annually so that it’s on the front-burner that there will be no tolerance of stealing or misappropriation,” she said.
The lecturer noted that unethical behaviour should not be tolerated “starting at the top”.
She noted that while “the tone at the top” determines how the organization was handled, some companies had ethical guidelines for employees but not for managers.
Warning signs
Chaderton suggested that companies evaluate employees’ compliance with company ethics and antifraud programmes during regular performance appraisals.
Furthermore, she posited that they should be trained in at least basic fraud prevention techniques and should know the warning signs of wrongdoing.
They should also be aware of the procedures for reporting suspicious activities, she said.  
Chaderton added that companies should conduct regular audits along with surprise audits of high-risk areas.  
She also suggested that companies establish more stringent hiring procedures in order to keep occupational fraud in check.
Chaderton said many companies were failing to conduct comprehensive background checks on potential employees and were consequently hiring people who had been fired for theft or misappropriation.
Chaderton said in some cases in the region, financial institutions were even writing recommendation letters for fraudulent employees so they could be hired by other companies.
The lecturer noted that fraudsters in the region were often quietly dismissed and seldom prosecuted.
“[Companies] don’t say why they let them go; they just give them a recommendation to move on,” she said, noting that that makes such individuals more likely to repeat criminal acts.
She added that many businesses ask potential employees for references but never check them.
“Clearly nobody is going to come and tell you they got fired for stealing.  You have to look at the résumé and see if there are [gaps]. Ask a question,” Chaderton recommended.
She also noted that “educational fraud”, or the presentation of fake certificates, was on the increase.
“When a person comes and says, ‘I have a degree from UWI. I graduated in 1968’, you need to see and be sure that is what the certificate looked like in 1968,” she said.
Chaderton noted that businesses also need to look at the credit histories of potential recruits since maxed out credit cards or loan defaults could signal potential problems.
Meanwhile, in the April 1 BARBADOS BUSINESS AUTHORITY, the Association of Chartered Certified Accountants (ACCA) called on accountants to advocate for whistleblowing legislation as part of efforts to tackle fraud and corruption.
Whistleblowing procedures
ACCA?head of public sector Gillian Fawcett said employees who witnessed illegal acts, severe incompetence or mismanagement had to be able to speak up without fear of victimization.
 “The legislation is really all about protecting those individuals so they are able to highlight issues which perhaps wouldn’t be identified otherwise,” Fawcett said during a visit to Barbados.
“There have been areas, certainly in the public sector, where there have been fundamental service failures because there have been cultures in place where individuals haven’t felt enabled to speak up.
“In some cases that’s led to life and death situations because of the [lack] of legislation and protection in place for that individual and in terms of the policies [not] being explicitly clear . . . ,” Fawcett said.
Head of ACCA Caribbean, Brenda Lee Tang, noted that although accountants were required to abide by a professional code of conduct, sometimes the organizations they worked for had no established whistleblowing procedures and if asked to do something illegal, they left the organization.
“When you do that, somebody there who doesn’t have that ethical or moral compass will continue doing it. That’s why there must be something in place,” she said.
Fawcett said legislation and policies had to be accompanied by awareness building.
“An organization might have a policy there but there’s no point having that if people in the organization aren’t aware that that policy is there,” she said.
She said that organizations needed an officer who was responsible for the whistleblowing policy and served as a key contact for employees.
In addition to this, she noted that in Britain there was also an independent hotline to which individuals could report their concerns.
In the May 20 BARBADOS BUSINESS AUTHORITY, director of Crime Stoppers Barbados Devrol Dupigny said the charity had launched various initiatives aimed at tackling some of the more crippling criminal activities that threatened business operations, including money laundering, embezzlement and misappropriation and the theft of company equipment and materials.
Among the initiatives is the Integrity Line – a reporting mechanism to clamp down on “white collar” crime.