Fraud and corruption in 2013

January 2013  |  MARKET OUTLOOK 2013

Financier Worldwide Magazine

January 2013 Issue

January 2013 Issue


Looking ahead, can we expect fraud and corruption to demand more attention as a boardroom issue? Based on experience, boards of directors are sometimes less diligent than they should be in performing independent background investigations on the management team chosen to meet the company’s mission. Similarly, boards of directors are not as diligent in doing the same regarding themselves. There should be no excuse for hiring a director or management team member with a history of illegalities, corruption or previous acts of personal indiscretion when the performance of a background investigation would obviate this risk.

In general and going forward, fraud and corruption remain the devil in disguise. And since most corporate frauds are discovered by an inside ‘tip’, they usually continue to plague companies for months as an unreported truth because, even though they may be known to someone, that someone may not have the courage to come forward to reveal what he or she believes to be the fraud truth. Otherwise, they may be discovered by systematic internal fraud diagnostic controls in their proper place or by outside auditors or by field examiners hired by lenders to monitor their collateral. Focusing on this possible major issue is a must for management and directors because of the severe cost of a fraud undetected in terms of money and reputation.

So, performing background investigations on senior and mid-level managers and directors as a pre-emptive analysis tool and putting in place a low fraud tolerance workplace environment policy is a proper place to start. Adding ongoing fraud surveillance and discovery policies is the next step to realistic fraud prevention, and doing this at every level of management and control is a best business practice – always.

The final word is ‘trust but verify everything and everyone’.

Jerry Oldham

Chief Executive Officer

1stWEST Financial Corporation

T: +1 (303) 670 3443

E: j.oldham@1stwest.com

www.1stwest.com

© Financier Worldwide


BY

Jerry Oldham

1stWEST Financial Corporation


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