Countering Fraud for Competitive Advantage (eBook)

Professor Mark Button is Director of the Centre for Counter Fraud Studies at the Institute of Criminal Justice Studies, University of Portsmouth. Mark has written extensively on counter fraud and private policing issues, publishing many articles, chapters and completing five books with two forthcoming. Some of the most significant research projects include leading the research on behalf of the National Fraud Authority and ACPO on fraud victims; the Department for International Development on fraud measurement, Acromas (AA and Saga) on 'Cash-for-Crash fraudsters', the Midlands Fraud Forum, Eversheds and PKF on 'Sanctioning Fraudsters'. Mark has also acted as a consultant for the United Nations Offices on Drugs and Crime on Civilian Private Security Services. Mark also holds the position of Head of Secretariat of the Counter Fraud Professional Accreditation Board. Before joining the University of Portsmouth he was a Research Assistant to the Rt Hon Bruce George MP specialising in policing, security and home affairs issues. Mark completed his undergraduate studies at the University of Exeter, his Masters at the University of Warwick and his Doctorate at the London School of Economics. Jim Gee is Director of Counter Fraud Services at BDO LLP, the leading accountancy and business services firm and Chair of the Advisory Board and Visiting Professor at the Centre for Counter Fraud Studies at University of Portsmouth. During more than 25 years as a counter fraud specialist, he led the team which cleaned up one of the most corrupt local authorities in the UK - London Borough of Lambeth - in the late 1990s; he advised the House of Commons Social Security Select Committee on fraud and Rt. Hon. Frank Field M.P. during his time as Minister of State for Welfare Reform; between 1998 and 2006 he was Director of Counter Fraud Services for the Department of Health and CEO of the NHS Counter Fraud Service, achieving reductions in losses of up to 60% and financial benefits equivalent to a 12 : 1 return on the costs of the work. Between 2004 and 2006 he was the founding Director General of the European Healthcare Fraud and Corruption Network; and he has since worked as a senior advisor to the UK Attorney-General on the UK Government's Fraud Review as well as delivering counter fraud and regulatory services to public bodies and private companies both in this country and internationally. He has worked with organisations from more than 35 countries to counter fraud including for mining companies in Africa and South East Asia. He has also advised the Chinese Government about how to measure, pre-empt and reduce the financial cost of fraud.

1 Introduction 1

1.1 Book Outline 4

End Notes 5

2 The Fraud Problem 7

2.1 Introduction 7

2.2 The Fraud Problem 7

2.3 The Extent of Fraud 15

2.4 Trends in Fraud 20

2.5 The Impact of Fraud 25

2.6 Conclusion 29

Further Reading 29

End Notes 29

3 The Fraudster and the Culture of Fraud 33

3.1 Introduction 33

3.2 Understanding the Fraudster 33

3.3 Cultures and Fraud 43

3.4 Conclusion 46

Further Reading 47

End Notes 47

4 The Resilience to Fraud 51

4.1 Introduction 51

4.2 National Resilience 51

4.3 Organisational Resilience 56

4.4 Further Research 63

4.5 ACFE Research 63

4.6 Understanding the Problem: Fusing the Fraudster, theCulture, and the Structures of Resilience 65

4.7 Conclusion 66

Further Reading 67

End Notes 67

5 Measuring Fraud Losses and Tailoring the Strategy69

5.1 Introduction 69

5.2 The Problem with Risk Management 70

5.3 Measuring Fraud 71

5.4 Wider Benefits of Fraud Measurement 81

5.5 Conclusion 82

Further Reading 83

End Notes 83

6 Creating an Anti-Fraud Culture and Preventing Fraud85

6.1 Introduction 85

6.2 Situational Measures 85

6.3 Creating an Anti-Fraud Culture 94

6.4 Conclusion 98

Further Reading 99

End Notes 99

7 Detecting Fraud and Investigating Professionally103

7.1 Introduction 103

7.2 The Costs of Investigation 103

7.3 Who will Investigate? 104

7.4 Proactive Investigations 107

7.5 Reactive Investigations 113

7.6 Conducting Fraud Investigations 115

7.7 Psychology and Investigation 125

7.8 Conclusion 128

Further Reading 129

End Notes 129

8 Sanctioning Fraudsters and Pursuing Redress 131

8.1 Introduction 131

8.2 Understanding Fraudsters and the Place of Deterrence 131

8.3 The Sanctions Tool Box 133

8.4 Publicising Sanctions 141

8.5 Conclusion 143

Further Reading 143

End Notes 143

9 Enhancing Performance through Counter-Fraud Metrics145

9.1 Introduction 145

9.2 New Ways of Thinking About Security and Fraud 145

9.3 Developing a Counter-Fraud Metrics Programme 150

9.4 Define Overall Objectives/Metrics 150

9.5 Decide Metrics That Meet Those Objectives 151

9.6 Develop Strategies for Generating Metrics 159

9.7 Establish Benchmarks and Targets 160

9.8 Determine How Metrics will be Reported 160

9.9 Create Action Plan 161

9.10 Review/Refine Cycle 161

9.11 Challenges and Critique of Metrics 162

9.12 Conclusion 163

Further Reading 163

End Notes 163

10 The Counter-Fraud Professional 165

10.1 Introduction 165

10.2 Counter-Fraud Professional Infrastructure 165

10.3 The Essence of the Counter-Fraud Professional 171

10.4 Redefining the Counter-Fraud Professional 176

10.5 The Counter-Fraud Department 177

10.6 Conclusion 178

Further Reading 178

End Notes 179

11 Reaping the New Competitive Advantage 181

11.1 Introduction 181

11.2 Bringing the Counter-Fraud Strategy Together 181

11.3 Reaping the Benefits 183

11.4 How Quickly can Losses be Reduced and by How Much? 185

11.5 The World's 500 Largest Companies 187

11.6 UK FTSE 350 Companies 188

11.7 French CAC 40 Listed Companies 190

11.8 German DAX 100 Listed Companies 191

11.9 Concluding Remarks: Reap the Advantage! 191

Further Reading 192

End Notes 192

Index 195