The Tribune

By DENISE MAYCOCK

Tribune Freeport Reporter

dmaycock@tribunemedia.net

A certified Bahamian fraud examiner said fraud is common in the Bahamas and that people are finding ways to come up with more “complex and diversified” fraudulent schemes.

“We hear of investment companies licensed in the Bahamas being charged in US Federal Courts or Canadian Courts for fraud related matters daily. To say therefore that fraud exists in the Bahamas is an understatement,” Rotarian Gaylord Taylor, CEO of AGT Security Services in Grand Bahama, told the Rotary Club of Sunrise on Wednesday.

He thinks that the motivation to commit fraud will further increase with the implementation of value added tax (VAT), as some economists believe that companies will actively seek to defraud the government.

“The Bahamas’ very economic culture has been one of tax evasion, stemming from our strength in the banking sector, for decades derived from our tax haven status,” he explained.

He also noted that “fraud rarely attracts the full attention of law enforcement, especially in the Bahamas where the common belief is ‘thief from thief and God smiles’, as most citizens look on this as a victimless crime.”

Mr Taylor, a director of The Bahamas Chapter of Certified Fraud Examiners, said retail stores and financial institutions such as banks and insurance firms, are frequently targeted by fraudsters.

Pointing out that fraud is an attractive method of criminality for enterprising and intelligent individuals, he stressed that small business owners also need to be more aware and pro-active in combating these crimes.

A survey taken by the Association of Certified Fraud Examiners, he indicated, revealed that of 1,483 fraud cases at companies, non- profit and government organizations worldwide, about half of the surveyed cases were in the United States. It also found that employee fraud is very costly for companies, resulting in about $3.7 trillion per year globally.

Mr Taylor shared some methods of how to detect and combat fraud.

He believes the establishment of a fraud hotline is one of the easiest and most cost-effective ways to combat fraud in the workplace.

“It was reported that in 2012 and 2013 some 42 per cent of fraud cases originated with tips most often from employees,” he stated.

He noted that Andy McNeal, a co-author of the 2014 Global Fraud Study, stated that many more fraud cases could be detected if organisations create a fraud hotline, which could also be a comment box or an email address for employees to give anonymous suggestions or tips.

He said other methods include management reviews, external audits and IT controls.

Mr Taylor stated that most small businesses should first secure their wireless connection.

“Your guest or free access portion of your network should be isolated from your secure network. Use next generation firewalls; ensure data is strictly controlled including company specific documents and files. Your system can be configured to require administrative permission for documents to be downloaded from your server. Install cameras over the file cabinets or where there is a limited access system. Create a culture of security by sensitizing and educating staff on the importance of data protection,” he stressed.

Retail stores, he said, should implement robust inventory control, frequent spot checks and make senior persons accountable for inventory shortfalls.

He indicated that another key tool is creating a code of conduct for employees and providing fraud training for employees including managers and executives.

“Outline your company’s policy in relation to fraud, be specific in your company’s action to a fraud matter, what will it entail and what will be the outcome if fraud is proved,” he said.

He stressed that employee fraud is the main culprit for most fraud committed in both retail stores and other businesses.

He noted that employers should take note of the long established rule of 10, 10, 80, which simply states that in most businesses 10 per cent of people will never steal no matter what, 1 per cent will steal if an opportunity presents itself and 80 per cent of employees will go either way, depending on how they rationalize a particular opportunity.

Mr Taylor said another aspect employers should bear in mind is the fraud triangle.

He explained: “The first part of the triangle is the financial problems or needs that same insurmountable, for example a high gambling debt. The second is the employee’s belief that there exists, at their place of work, an opportunity to resolve the financial problem through illegal means without getting caught; and finally is the individual’s need to rationalize or justify the intended illegal action “my boss doesn’t pay me enough so this money really is what I worked for already”.

“Employers can, therefore, be on the lookout for the first part, put preventive methods in place for the second, and therefore negate the third aspect all together,” he said.