Innovation in Compliance – Episode 246 – Fraud & Corruption in the Corporate World with Alan Saquella | Thomas Fox – Compliance Evangelist

Alan Saquella is a fraud risk practitioner, a Certified Protection Professional, and a 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. I welcome him to this week’s show to discuss how the corporate security world and fraud investigation intersect and form a union and how this union helps build a more effective fraud prevention program. See more +

Alan Saquella is a fraud risk practitioner, a Certified Protection Professional, and a 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. I welcome him to this week’s show to discuss how the corporate security world and fraud investigation intersect and form a union and how this union helps build a more effective fraud prevention program.

The Plague Upon the Corporate World

I want 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 an accurate representation of fraud taking place in the real corporate world. He states, “Whether you’re a private or publicly-traded company, there’s a lot more that’s never reported.” He remarks that the report claimed that about 50% of fraud cases are prosecuted or brought to the prosecution. He understands that less than 5% of cases are brought to the prosecution from his work. 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 non-violent white-collar crimes, so 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. I asked Alan if he agreed 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. I found it to be most successful 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

I ask 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. Companies should also communicate with high-risk groups about fraud and fraud prevention. Alan explains that groups like sales and accounting tend to be most active in fraud. He also suggests that behavior-based surveys are one of the most effective programs in fraud prevention. These surveys give a lot more useful information than opinion surveys. It also “calls out the whistleblowers instead of waiting for the whistleblower to get to where they’re frustrated.” see less-

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