The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian fraud investigator yesterday said just 10-15 percent of such cases are subjected to extensive probes and prosecution in this nation due to corporate victims fearing their reputations will be damaged.

Kendrick Christie, president of the Association of Certified Fraud Examiners Bahamas Chapter, told a seminar hosted by local security firm, Preventative Measures, that many businesses fear it will “panic the public” if it becomes known they had fallen victim to fraud-related scams as a result of prosecuting the culprits.

And he added that the judicial system’s “limitations”, with those found guilty often receiving relatively light sentences, coupled with a lack of “incentive” for the police to vigorously prosecute such cases, further dissuaded companies from pursuing culprits beyond reaching settlement agreements to reimburse missing monies and terminating them if they were employees.

“There’s been a positive trend in The Bahamas just from an anecdotal sense,” Mr Christie said when it came to pursuing suspected fraudsters. “From my experience, a lot of entities are now pushing to investigate the fraud and assess the prosecution of it because of the limitations of the court system. Certainly, the sentences are very light” compared to the offence.

He added that just 10-15 percent of suspected fraud cases are vigorously pursued, confirming subsequently to Tribune Business that this number “refers to the percentage of cases that are investigated, that are brought forward for prosecution and fraud examination”.

Noting that many fraud-related cases are not properly recorded, Mr Christie said: “A lot of the cases are not reported because companies don’t want to lose the respect of, or panic, the public. That’s what executives look at.” He recalled a case involving a Family Island business, which he did not name, which had lost $100,000 to fraud.

The co-owner, after being informed of the amount, said “we can tolerate that” and questioned how the loss should be treated in the firm’s accounts. Mr Christie highlighted this as an example of how Bahamian companies typically weigh-up “the fall-out, the cost and chances if they’re prosecuted. Sometimes police officers don’t have the incentive to prosecute it.”

However, he also recalled the other co-owner being concerned that, if there was more than one perpetrator, the company needed to prosecute the matter to send a zero tolerance message to others. “I left them to decide what to do,” Mr Christie said.

He subsequently told Tribune Business that his advice to Bahamian companies was to at least pursue vigorous fraud investigations internally so as to deter other staff from such behaviour. “That demonstrates to employees that you will prosecute,” Mr Christie explained. “A lot of executives prosecute it because it demonstrates to employees and future employees, and then even to hold managers accountable.

“Some of these cases are as a result of lack of proper supervision by executives, which increases the risk that someone will take advantage of the opportunity. In The Bahamas sense, a lot of entities, while they investigate it and prosecute it based on the evidence, they hope it doesn’t come into the public sphere because they feel it will be a negative for them and their clients.

“It’s a mixed bag, but we say at least internally investigate it and demonstrate to employees that you don’t tolerate it. It can invite another incident if it is tolerated.” With court cases taking up to five years or longer, “sentences tending to be light” and recoveries hard to obtain, victims were choosing to take their complaints to professional bodies if the perpetrators were members.

“The Bahamas has some issues in the legal system,” Mr Christie added. “These fraud cases can be complex investigations with a lot of numbers and accounting estimates. Numbers can be manipulated. It’s not as clear cut.”

Warning that most persons will fall victim to fraud “at some point” in their lives, he warned that there were multiple scams that present dangers to Bahamians. Besides so-called “romance schemes”, where culprits convince persons via social media and online that they are in love with them, and persuade them to send money or hand over bank account details, Mr Christie also pointed to the “itune gift cards” scheme.

Perpetrators persuade persons to acquire these gift cards and pass these to them in return for a fee, which is never paid. Along with ‘phishing’ attacks that seek to lull unsuspecting victims into handing over their bank account details, Mr Christie said “denial of service” attacks were becoming more common where cyber attacks took down the websites of Bahamian companies and blocked access to them or their wider computer systems.

“We don’t want to be scaremongers. Trust and verify, and don’t put your eggs in one basket so that if you fall victim to a scam you don’t lose all your investment,” Mr Christie said. “What we are finding in today’s world with technology is that it’s becoming easier to hide your tracks. Romance schemes are on the rise, and are pretty much the result of the times we live in where persons meet online rather than in the physical world. Who do you complain to?

“We’ve seen the situation with some entities in The Bahamas where the whole website has gone down and, sometimes it’s not done for monetary purposes.” Burke Files, an international investigator specialising in asset recovery, due diligence, anti-money laundering and intellectual property matters, told the same seminar that “the number one way to prevent fraud is to screen your employees no less than every three years or when they get a promotion”.