The detection of corporate fraud usually arises from an internal audit finding, anonymous tip off, suspicion, complaint, whistle-blower or allegation. In our experience, suspicions of fraud are normally well founded, irrespective of the source.
If a suspicion of fraud has arisen we trust clients’ instincts and consult with them to develop the next course of action, analyse the evidence and circumstances surrounding the suspicion and to set out objectives in an investigation plan.
Whatever the investigation, each case must begin with the intention that it will end in litigation.
“Once a suspicion of fraud has arisen, don’t panic but act quickly. Seize the initiative by developing a course of action. Analyse the available evidence and circumstances surrounding the suspicion, retain accurate records, develop a fraud theory and set out your objectives in an investigation plan.”
Our CEO was part of a fraud investigation team working for a multi-national electronics company who had several manufacturing plants in Juarez, Mexico, an area which is often a hostile and dangerous environment to conduct business.
After conducting a fraud risk review, the fraud investigation team identified several senior executives who were accepting bribes from a local narcotics cartel to supply them with arranged over-run production items.
These high value items were then sold on the black market by the cartel. Over three years, the fraud had cost the company $5.8m. In addition, the company had to bear the cost of removing the fraudsters, increasing its physical security and to hire a new leadership team.
The team also uncovered additional instances of fraud and corruption in the procurement department and from their vendors that led to investigations, surveillance and interviews being conducted across the Mexican Border Zones, Texas and San Francisco.