WhistleBlower Security - News & Media

5% Annual Revenues Lost to Fraud WhistleBlower News

Shannon Walker — Tue, 15 Nov 2011 14:11:45 -0800

Organizations around the world lose an estimated five percent of their annual revenues to fraud, according to a survey of fraud experts conducted by the Association of Certified Fraud Examiners (ACFE). As the International Fraud Awareness Week, winds down, many organizations are casting a spotlight on this urgent problem. This weeklong campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education.

The International Fraud Awareness Week is encouraging organizations to embrace fraud awareness, especially as it relates to transparency and corporate governance matters. Ensuring that trust is put back into the markets and that corporate well-being become a solid target in business management is key. Another point is accountability and transparency, and how they raise issues of ethical behavior and the importance of corporate values.

It’s important to consider the programs you are developing about fraud, misconduct and corruption. Identify the opportunities to work with your finance teams to increase their detection capabilities, including the tools they’re using to increase awareness to help mitigate fraud risk.

Preventing Fraud

Fraud governance and the importance of the oversight provided by the board, and supervision by management is central to prevention. There needs to be accountability, as well as rules and responsibilities for managing fraud risk. Very often organizations have a decentralized approach to managing fraud prevention and detection activities, and unfortunately these efforts are not coordinated within the organization. When efforts lack coordination, it gives rise to the opportunity for either gaps in your fraud risk-management activities or overlap that isn’t aligned with risk-mitigation authorities.

You can be over-controlled in low-risk areas and under-controlled in high risk. What you really want to see is a balance between a risk and internal-control structure so you get the best bang for your buck when you make an investment in fraud-risk management.

Organizations need to be really focused on providing training and awareness programs and embracing new communications strategies. Organizations need to take steps to educate employees about their responsibility to the organization to report violations of policy, laws and regulations, so that the first line of defense is internal reporting rather than a call to the SEC.

New Whistleblower Rules

Organizations rely on different reporting mechanisms to detect fraud. Many rely on chain-of-command, where employees report to their managers, who report to their managers, and so on. Hotlines are often used for anonymity purposes. The Dodd-Frank Act highlighted that organizations need to consider how the mechanisms are provided to employees to report, as well as their commitment to ethics and integrity.

Fraud Week Outcomes

There are increased concerns now about corruption and bribery matters, and compliance with the U.K. Bribery Act, especially as we get to the holiday season, a well-known gift-giving time of year. Organizations are very concerned about gift, meal and entertainment expenses, especially as to how they pertain to the U.K. Bribery Act. Make sure that your employees know what the guidelines are, especially as far as gift giving is concerned.

It’s International Fraud Awareness Week, and organizations can no longer be U.S.-centric in their ethics and compliance programs. They truly need to embrace ethics and compliance within all the jurisdictions they operate. It’s also important for organizations to shift their mindset to ensuring that employees and those working across their operations, regardless of location, are aware of responsibilities for compliance and ethics programs.

Managing your compliance program

Shannon Walker - President of WhistleBlower Security — Mon, 03 Oct 2011 11:18:22 -0700

It all starts with that overused adage “the tone at the top”. Although it may seem trite, unless employees sense that there is true adherence and cohesion at the executive level, no real change or embracing of compliance policies will occur. The tone from the executive and lower level management have to be aligned to cultivate a culture of teamwork and common goals.

Simplifying the whistleblower policy into plain English is a good first place to start. Make it clear, non-retaliatory in nature; train and retrain management and employees on the need to come forward if they see wrongdoing in the workplace. Implement, publicize and make your policy and procedure as user friendly as possible. Publish sanitized cases when you can so your employees see examples of reporting and of the remediation that occurs as follow-up. You, as management have to take internal reports seriously, and they as employees, need to know it is their duty to come forward. And most importantly, they need to know that when they do come forward, retaliation will not be tolerated at any level.

Update and educate employees often about your internal compliance program. Consider other tools to augment your hotline – such as an old fashioned suggestion box in the lunch room or pre-paid report cards that are made readily available in the elevators, lunchrooms and orientation packages.

And, make sure you always let them know about the third party helpline that is available to them if they feel they can’t go to their direct supervisors. If they don’t know about the service, you won’t know about the problems.

5 Most Common Mistakes

Discouraging callers who have questions or need advice. Invite everyone to participate in using the helpline. Questions often lead to information being shared.
Investigation mistakes – do not take too long in resolving the incident; ensure your investigators are properly trained; objectivity is key and so is vigorously protecting anonymity – these are the essential tenets to the success of the program.
Not publicizing sanitized outcomes to the employees – share experiences so they understand what kind of cases qualify as wrongdoing and show them you take action.
Ensure you share with the Board and Senior Management helpline data that has context and meaning to them.

5 Most Reported Incident Types

Accounting/Auditing
Business Integrity - fraud, conflict of interest
Diversity, Human Resources and workplace respect
Environmental, Health and Safety
Misuse, Misappropriation of Assets

How Can You Prevent Fraud AntiFraud Training

nagel + associates — Thu, 16 Jun 2011 16:00:45 -0700

After a fraud is revealed, employees invariably recognize transactions or aspects of such transactions that appeared suspicious; however, they simply did not recognize the "warning signs" that the transaction(s) were in fact fraudulent. This should come as no surprise, as most employees generally have limited, if any, formal anti-fraud training. Check out the video "How can you prevent internal fraud?" , which includes a discussion on both preventing internal and external fraud, as well as noting the importance of anti-fraud training.

Whistleblower Security and KaizenSox Consulting Enter Global Partnership

Shannon Walker — Fri, 22 Oct 2010 11:00:01 -0700

WhistleBlower Security has entered into a new Global Partnership to provide its services throughout India , Asia and MEA ( Middle East & Africa )

Kaizensox is a Global Management Consulting firm based in Dubai Silicon Oasis, UAE & Vancouver, BC, Canada with business operations across India, Middle East & North America.

Kaizensox with its inspiration from Japanese Quality management model provides unique corporate excellence strategies to global business enterprises. It combines Continuous Improvement Process (CIP), Compliances (SOX, ISO, AML, BASEL), Business Process Reengineering (BPR), Business Process Management (BPM), Project Management, Forensic Accounting and Fraud detection methodology and facilitates corporate governance and profitability enhancement.

For further information, please contact:
Sunil Bahri
Chief Executive Officer
Kaizensox Consulting - Global Management Consultants
Dubai Silicon Oasis ,Dubai , UAE

Global Cell: +971.55.886.8029
Canada Cell: +1.604.562.4022
India Cell:+ 91.99.403.78.250
Email: sunil@kaizensox.com
Skype:skby888
www.kaizensox.com

Canadian Securities Regulators Announce New Insider Reporting Regime

The Canadian Securities Administrators (CSA) — Fri, 01 Oct 2010 10:38:31 -0700

For Immediate Release
January 22, 2010
Canadian Securities Regulators Announce New Insider Reporting Regime

Vancouver – The Canadian Securities Administrators (CSA) published today advance notice of adoption of a new insider reporting regime that aims to streamline how insiders report their securities transactions to the public.

National Instrument 55-104 Insider Reporting Requirements and Exemptions, the companion policy, and related amendments set out the framework and guidelines for a new insider reporting regime that among other things:

* reduces the number of insiders required to file insider reports to a core group that have the greatest access to material undisclosed information and the greatest influence over the reporting issuer;
* shortens the reporting deadline for subsequent reports from 10 days to five calendar days after the trade for most transactions, following a six-month transition period;
* simplifies and brings consistency to stock-based compensation reporting requirements;
* gives issuers the option to file reports on stock-based compensation for insiders; and
* establishes a more focused and more timely insider reporting system, which should benefit investors and other market participants who use the system.

“We expect the new insider reporting regime will make it easier for issuers and insiders to understand their obligations, while promoting timely and effective compliance,” said Jean St-Gelais, Chair of the CSA and President & Chief Executive Officer of the Autorité des marchés financiers (Québec). “It should also provide more useful and consistent information to investors and others who assess insider activity.”

The new regime generally consolidates the main insider reporting requirements and exemptions in a single national instrument, except in Ontario where the main insider reporting requirements will remain in the Ontario Securities Act. Nevertheless, the substance of the requirements for insider reporting will be the same across the CSA jurisdictions. Subject to obtaining all necessary ministerial or governmental approvals, the new insider reporting regime will take effect on April 30, 2010.

The published materials are available on the websites of various CSA members.

The CSA, the council of the securities regulators of Canada’s provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.
For more information:

Ken Gracey
British Columbia Securities Commission
604-899-6577

Sylvain Théberge
Autorité des marchés financiers
514-940-2176

Mark Dickey
Alberta Securities Commission
403-297-4481

Theresa Ebden
Ontario Securities Commission
416-593-8307

Ainsley Cunningham
Manitoba Securities Commission
204-945-4733

Wendy Connors-Beckett
New Brunswick Securities Commission
506-643-7745

Natalie MacLellan
Nova Scotia Securities Commission
902-424-8586

Barbara Shourounis
Saskatchewan Financial Services
Commission
306-787-5842

Janice Callbeck
PEI Securities Office
Office of the Attorney General
902-368-6288

Doug Connolly
Financial Services Regulation Div.
Newfoundland and Labrador
709-729-2594

Fred Pretorius
Yukon Securities Registry
867-667-5225

Louis Arki
Nunavut Securities Office
867-975-6587

Donn MacDougall
Northwest Territories
Securities Office
867-920-8984

ePTthe Electronic Newsletter of Pharmaceutical Technology

Erik Greb — Thu, 08 Jul 2010 09:44:14 -0700

Last week, Senator Charles Grassley (R-IA) sent letters to 16 drugmakers, including Pfizer (New York), AstraZeneca (London), and Eli Lilly (Indianapolis), asking them about their current policies regarding whistleblowers—employees who file complaints under the False Claims Act (FCA). The letters include questions about how the companies inform employees about the FCA, how the companies handle FCA complaints, how the companies ensure that whistleblowers are treated fairly, how claims are resolved, and whether the companies have changed their policies in light of the passage of the Fraud Enforcement and Recovery Act (FERA) of 2009.

“In the last three years, pharmaceutical companies have paid out over $3 billion in settlements under the False Claims Act for defrauding federal healthcare programs,” said Grassley in a press release. “There can never be too many taxpayer watchdogs, so I see this letter as an opportunity to foster a mindset that recognizes the value of whistleblowers and the duty these companies have to act honestly when seeking taxpayer dollars.”

After a Senate Committee on Finance hearing in June 2005 revealed that some corporations were structured to avoid accountability when employees raised concerns to the highest levels of the company, Grassley sent letters to 18 drugmakers, asking them how they were informing their employees of the whistleblower provisions of the FCA. Grassley received responses, and his new letters seek updated information about the companies’ programs.

The FCA, first sought by President Lincoln, allows private citizens to file suits on behalf of the government in cases of alleged fraud, including healthcare fraud. If the defendants are found guilty, FCA provides that the citizens and the US government share in any monetary recovery. Since the law was amended in 1986, the law has recovered more than $22 billion that would otherwise have been lost, according to the US Department of Justice (DOJ). As a result of successful FCA lawsuits, whistleblowers were paid $2.39 billion from 1987 to 2009, according to DOJ.

The FERA revised the liability aspects of the FCA and extended antiretaliation protections to agents and contractors of employers that may be defendants under the FCA. Grassley was a lead sponsor of the legislation, which was signed into law on May 20, 2009.

Since January 2009, AstraZeneca has paid $520 million, Pfizer has paid $1 billion, and Eli Lily has paid $1.4 billion to settle FCA claims.

Grassley’s letters are available here.

Alberta men charged in alledged $60M ponzi scheme

Mon, 29 Mar 2010 09:43:26 -0700

March 29, 2010 | 15:22
QMI Agency

CALGARY — Three Alberta men are charged with fraud for allegedly running a $60-million Ponzi scheme.

RCMP allege a company called HMS Financial Inc. provided a series of investments that are believed to be part of a Ponzi scheme that was operational from 2001 to 2004.

In a statement, RCMP said more than 1,000 people across North America were victimized to the tune of $60 million.

The statement said investors were told they would get as much as 12% back a month.

The accused will appear in court on April 16. People who feel they may have been victimized are asked to contact the

RCMP's commercial crime section.

Charged with fraud over $5,000 are (Harold) Murray Stark, 73, of Three Hills, Alta.; Robert Fyn a.k.a. Col. Robbie Fyn, 62, of Linden, Alta.; and Garth S. Bailey, 57 of Okotoks, Alta.

The three, along with Katherine Rodrique Bailey, 53, of Okotoks, are also charged with money laundering.

The RCMP have scheduled a press conference for Monday afternoon

It Pays to Blow the Whistle!

Author — Fri, 04 Sep 2009 09:11:12 -0700

Whistleblower awarded record US$51.5-million
Firm fined US$2.3B; Former salesman was appalled by Pfizer's tactics

Taking on corporate giants can feel like tilting at windmills, but John Kopchinski's six-year legal battle against Pfizer Inc. just made him a rich man. The Gulf War veteran and former Pfizer sales representative will earn more than US$51.5-million as a result of his whistleblower lawsuit against the world's biggest drugmaker and the record penalty the company must pay the U.S. government for its massive marketing transgressions. Mr. Kopchinski, appalled by Pfizer's tactics in selling the pain drug Bextra, filed a "qui tam" lawsuit in 2003, sparking federal and state probes that led to Wednesday's agreement by the company to pay US$2.3-billion in civil and criminal penalties and plead guilty to a felony charge for promoting Bextra and 12 other drugs for unapproved uses and doses.

"In the Army I was expected to protect people at all costs," he said in a statement. "At Pfizer I was expected to increase profits at all costs, even when sales meant endangering lives. "I couldn't do that," added Mr. Kopchinski, 45, who was fired by Pfizer in March 2003, two years before the company pulled Bextra from the market over concerns it raised the risk of heart attacks and strokes. At the time of his dismissal after raising his concerns with the company, he had a baby son and his wife was pregnant with twins. He went from earning about US$125,000 a year to living off his retirement fund before landing a job with an insurance company for US$40,000 a year. "It was a lot of stress on the family. I pretty much depleted my entire 401(k)," he said. "The last six years have been pretty hard, so going forward it's going to be pretty much easier," said Mr. Kopchinski, noting that college for his young children "is taken care of." Erika Kelton, Mr. Kopchinski's lead attorney from the firm of Phillips & Cohen LLP, said large rewards are justified because of what whistleblowers must endure, often for many years, after complaints within the company go unheeded.

"Particularly in pharma, it's no secret that it's an industry that can blackball former employees," Ms. Kelton said, "so the reward is important both to encourage people to step forward and to recognize that their contributions are huge." Mr. Kopchinski and five other whistleblowers will earn more than US$102-million in payments from the U.S. government under the False Claims Act, through which individuals can reap rewards for exposing corporate wrongdoing.

"The use of whistleblowers has really opened up the keys to the kingdom in terms of what's going on in these companies," said Dean Zerbe, senior counsel for the National Whistleblower Center and a partner at the law firm of Zerbe, Fingeret, Frank and Jadav in Washington. "You'd never find out what's happening without this kind of reward structure," he said. Mr. Kopchinski was hired by former Pfizer CEO Edward Pratt in 1992 after carrying out a correspondence with him while serving as a platoon leader in a military police company on the Saudi Arabia-Kuwait border during the Gulf War.

Under a later Pfizer regime, he was selling the epilepsy drug Neurontin when a previous whistleblower suit was filed against the company over similar illegal promotion tactics that led to stiff penalties and a form of corporate probation. At the time he was told by managers that the Neurontin suit would be in the news and any physicians who asked questions should be told it was just complaints from a disgruntled former employee, Mr. Kopchinski said. Ironically, after filing the Bextra suit, "I was the disgruntled former employee," he said. "What you see here is a company which essentially had a culture of corruption," said Patrick Burns, a spokesman for Taxpayers Against Fraud, a U.S. non-profit organization that helps connect whistleblowers with attorneys on False Claims Act cases.

Bill Berkrot, Reuters Published: Friday, September 04, 2009

ACFE Estimates US Organizations Lose 7 Percent of Revenues to Fraud

Sat, 20 Jun 2009 09:42:10 -0700

AUSTIN – U.S. organizations lose an estimated seven percent of their annual revenues to fraud, according to a survey of Certified Fraud Examiners who investigated cases between January 2006 and February 2008. The Association of Certified Fraud Examiners (ACFE) published the results of the survey in its highly-anticipated 2008 Report to the Nation on Occupational Fraud & Abuse.

Whistleblower Security is helping to promote awareness of the new research, as it indicates that fraud continues to be a serious problem for businesses and organizations worldwide. “We are proud to be in a business that promotes integrity and ethics within the workplace. We believe that our services support business and support employees,” said Shannon Walker, President of Whistleblower.

The Report also found that:

Fraud schemes tend to be extremely costly. The median loss caused by the occupational frauds in this study was $175,000. More than one-quarter of frauds involved losses of at least $1 million.
Schemes frequently continue for years before they are detected. The typical fraud in our study lasted two years from the time it began until the time it was caught by the victim organization.
Frauds were most often committed by the accounting department or upper management, and most fraudsters were first-time offenders. Only seven percent of fraud perpetrators in the study had prior convictions and only 12 percent had been previously terminated by an employer for fraud-related conduct.
Occupational frauds are much more likely to be detected by a tip than by audits, controls or other means.
Small businesses are especially vulnerable to occupational fraud.
Seventy-eight percent of victim organizations modified their anti-fraud controls after discovering that they had been defrauded.

The Report also details findings such as how organizations were impacted based upon industry, how the implementation of anti-fraud controls affected exposure to fraud, and the most common behavioral traits observed among fraud perpetrators.

The Report to the Nation is available for download online at the ACFE’s web site: www.ACFE.com/RTTN. The Report is in PDF format.

About Whistleblower Security Inc.

Whistleblower Security provides customizable reporting solutions for organizations worldwide. Founded in 2005, Whistleblower is Canada’s leading provider of proprietary technology solutions to assist organizations with their risk mitigation and compliance requirements. For more information, visit www.whistleblowersecurity.com. Making Good Companies Better.

About the Association of Certified Fraud Examiners

The ACFE is the world's premier provider of anti-fraud training and education. Together with nearly 50,000 members in over than 125 countries, the ACFE is reducing the incidence of fraud and providing the training and resources to fight fraud more effectively. Founded in 1988 by Joseph T. Wells, CFE, CPA, the ACFE proudly celebrates its 20th anniversary as the leader in the global fight against fraud. For more information about the ACFE, visit www.ACFE.com.