Alan Saquella is a fraud risk practitioner as well as a Certified Protection Professional and Certified Polygraph Examiner. He currently works as a full-time professor at the Embry-Riddle Aeronautical University where he teaches security, intelligence, and fraud investigation in the business world. Tom Fox welcomes him to this week’s show to talk about how the corporate security world and fraud investigation intersect and form a union, and how this union helps to build a more effective fraud prevention program. 

The Plague Upon the Corporate World

Tom wants to know how big an issue fraud and corruption are in the corporate world and how they manifest themselves. Alan believes that the statistics in the ACF report are not a true representation of fraud taking place in the real corporate world. He states, “Whether you're a private company or publicly-traded company, there's a lot more that goes on that's never reported.” He remarks that the report claimed that about 50% of fraud cases are prosecuted or brought to the prosecution. From his work, he understands that less than 5% of cases are actually brought to the prosecution. With regard to corruption, Alan says that for some companies in and outside of the United States, “corruption and bribery are just part of doing business” so it will continue to flourish. Organizations usually bury cases of fraud or corruption, as they can be damaging and embarrassing to the brand’s public image and reputation. Additionally, fraud and corruption are white-collar non-violent crimes, which is why they are not taken seriously by the organization.

The Dilemma of Whistleblowers

According to the report, the ideal way to detect fraud in your organization is internal reporting, also known as whistleblowing. The government also suggests that the primary element of successful anti-corruption compliance programs are whistleblowers. Tom asks Alan if he agrees with these proposed ideas. Alan cautions, “I’ve seen it used very effectively in some organizations and not so much in others … I think all corporate investigative folks will agree it’s a key element to a fraud prevention program. Where I found it to be most successful is when it’s highly publicized.” Companies that do not advertise their fraud whistleblowing hotline are less likely to get tips, as potential whistleblowers feel less confident in reporting any indiscretions. 

Fraud Prevention

Tom asks Alan what he thinks are the key elements of a successful fraud prevention program. Alan explains that even though whistleblowers are the most effective way to curb fraud in the workplace, companies must also look at the way they conduct business internally. “For example, tying bonuses to individual performance is always a risky endeavor. It tends to cause folks to take those chances and they're right down the fence in that gray area,” he cautions. Alan advises that companies should reward based on group performance, to prevent desperate employees from committing fraud to get ahead. Additionally, companies ought to communicate with high-risk groups about fraud and fraud prevention. Alan explains that groups like sales and accounting tend to be most active in the fraud area. He also suggests that behavior-based surveys are one of the most effective programs in fraud prevention. These types of surveys give a lot more useful information than opinion surveys and it also “calls out the whistleblowers instead of waiting for the whistleblower to get to that point where they're frustrated.” 

Resources

Alan Saquella | LinkedIn | Embry-Riddle Aeronautical University