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FRAUD EXAMINERS LECTURE NOTE
COURSE: INVESTIGATION AND REPORTING
LECTURER: DR EMMANUEL UZUEGBU-WILSON
What is Fraud? : Fraud can be defined as:
a. An intentional act
b. By one or more individuals among management, those charged
with governance, employees, or third parties
c. Involving the use of deception
d. To obtain an unjust or illegal advantage
What is a Fraud Investigation?
A fraud investigation determines whether a scam has taken place and
gathers evidence to protect the victims involved. Fraud is
misrepresentation with the intent to deceive. For example, if a company
makes a specific claim about a product and knows that the product won't
work as promised, they are guilty of fraud.
What Happens During Fraud Investigations?
Fraud investigations begin with a meeting between the investigator and
client. The person launching the investigation explains why they suspect
deceit and hands over any evidence they have supporting their claims. A
good fraud investigator will use this initial information to find more
evidence and information. To do this, they may use surveillance,asset
searches, background checks, employee investigations, business
investigations, and other methods.
Insurance fraud, Corporate Fraud, Financial Fraud Identity Theft,
Internet Fraud ,Internet fraud
Why Do I Need a Fraud Investigation?
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If you are the victim of a scam, you may lose significant amounts of
money and, in some cases, your good name. Proving a fraud actually
occurred, however, can be complicated and evidence you gather on your
own may not be admissible in court. A qualified, experienced
investigator helps you receive the compensation you deserve.
● 10 STEPS TO AN EFFECTIVE INVESTIGATION
Step 1: Determine whether an investigation is necessary. Some
federal laws require employers to conduct an investigation following a
complaint of wrongdoing. Even if an employee complains but then asks
an employer not to take action, it's usually better to investigate to avoid
liability than have to explain why an investigation wasn't conducted. The
decision can depend on the seriousness of the allegations, the number of
employees involved, and whether the full extent of the wrongdoing is
known.
Step 2: Determine whether interim relief is necessary. Taking action
before the investigation is complete may be necessary for health or
safety reasons, or in situations that are very disruptive or emotionally
charged. Temporary transfers, reassignments, or paid leave are examples
of interim relief employers can use when necessary.
Step 3: Determine who should conduct the investigation. Generally,
it's better if the investigator is someone not too closely involved in the
situation (e.g., if an employee complains about co-worker harassment, it
may be better not to have their supervisor conduct the investigation).
Having two investigators is often helpful so that one person can take
notes during witness interviews and the other can focus on questions and
follow-up inquiries. The second investigator can also serve as a witness
to confirm events or statements that occurred during the interviews.
Step 4: Preserve, obtain, and review all relevant
documents. Investigators should ask witnesses if they have any relevant
documents, including e-mails, expense reports, notes, surveillance
camera tapes, and personnel documents. It's better to find out all the
facts during the investigation than to be surprised by information that
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surfaces later during a lawsuit. Employers also need to be mindful of
new federal rules that require employers to preserve electronic
information that may be relevant to a lawsuit.
Step 5: Review potential legal issues. Employers should know whether
the investigation is required by law. Once the legal issues are outlined,
the investigation can be tailored to obtain relevant information.
Employers may want to contact their legal counsel to make sure they've
considered all areas of potential liability.
Step 6: Determine time and place to conduct investigation. The
investigation should start promptly after the alleged problem is
discovered or reported. Interviews should be held in a private area where
witnesses feel comfortable about disclosing information. Obtaining as
much relevant information as possible will help employers get a
complete picture of the facts. For this reason, employers should consider
conducting interviews away from the company premises.
Step 7: Interview individuals with knowledge of facts. It's a good idea
to prepare talking points and interview questions in advance so that
there's thorough coverage of the issues. The prepared materials can also
serve as good documentary evidence of the investigation. Generally, it
makes sense to start the interviews with the complaining employee to
understand the problem and determine the scope of the investigation.
Employers can request but should not require a written complaint or
statement from the complaining employee. A written statement can help
avoid problems if the person's story starts to change as events unfold.
Next, investigators should talk with the accused wrongdoer and anyone
who has any relevant information. A good approach is to ask open-
ended questions that invite a person to provide information, listen
carefully to the responses, and follow up with narrower questions. It's
important to remember to ask each person to provide any related
documents they have, including e-mails and other electronic documents.
Step 8: Prepare an investigation report. After carefully documenting
the facts gathered during the interviews, the investigation report should
summarize what happened, identify relevant policies and procedures,
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provide important factual findings, analyze inconsistent or conflicting
information, and conclude by indicating any necessary corrective action.
Employers should keep in mind that all the documents they create during
the investigation may be subject to discovery if there's a subsequent
lawsuit.
Step 9: Take appropriate action. Any corrective action needed should
be tailored to the specific situation. Appropriate action can include:
training, disciplinary action, creating new policies, or revising existing
policies.
Step 10: Follow up. It's a good idea to follow-up with employees to let
them know that the company took the complaint seriously and
conducted a thorough investigation. Do not, however, disclose any
corrective action taken against the wrongdoer that's private personnel
information. Document the follow-up meetings and encourage
employees to immediately report any additional claims or retaliation.
Effective workplace investigations can help employers address a
problem early on and avoid costly losses. Taking the time to prepare for
and conduct a thorough investigation will go a long way in helping
employers avoid liability, improve employee morale, and keep their
work environments productive.
Definition of Terms Relating to Fraud Investigation
Allegation of Misconduct: The reasonable belief based on factual
information that misconduct has occurred.
Complainant: A staff member who makes a good faith communication
that discloses or demonstrates an intention to disclose information that
misconduct may have occurred.
Conflict of interest: A conflict of interest occurs when an individual or
organization is involved in multiple interests, one of which could
possibly corrupt the motivation for an act in the other.
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Disciplinary Action The procedure initiated against a staff member
pursuant to Staff Regulation
Evidence Any type of proof which tends to establish or disprove a fact
material to the case. It includes, but is not limited to, oral testimony of
witnesses, including experts on technical matters, documents, electronic,
audio, video records and photographs.
Exculpate To free from blame or accusation (exculpatory).
Inculpate To accuse or to implicate (oneself or another) in a crime or
other wrongdoing (inculpatory).
Investigation
A formal fact finding enquiry to examine allegations of misconduct and
wrongdoing in order to determine whether they have occurred and if so,
the person or persons responsible.
Investigator a person designated to conduct an investigation related to
cases of allegations of wrongdoing. An investigator may also be a
person designated directly by the Director General in certain cases, to
conduct an investigation into allegations of wrongdoing.
Misconduct
the failure by a staff member to comply with his or her obligations or
other relevant administrative issuances, or to observe the standards of
conduct expected of an international civil servant.
Mitigate To make less severe or intense (mitigation).
Preliminary Evaluation
The process of collecting, preserving and securing basic evidence, and
the evaluation of this evidence to determine whether an investigation
into reported allegations of wrongdoing is warranted.
Standard Operating Procedure
A set of internal instructions covering those features of operations which
lend themselves to a definite or standardized procedure without loss of
effectiveness.
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Subject
A staff member who is the focus of an investigation of alleged
misconduct either by virtue of an allegation made, or evidence gathered
during the course of an investigation.
Whistle-blower
Any staff member who reports a suspicion of alleged misconduct or
wrongdoing within an organization to those in authority.
Witness
One who sees, knows or vouches for something.
Wrongdoing
The act or an instance of doing something immoral or illegal.
Principles of Investigation Activity
Accountability
Each investigator is accountable to the Director and is responsible for
their proper performance and the quality of the casework allocated to
them.
Professionalism
Each investigation will be conducted in accordance with the provisions
of the Internal Audit . Each investigation must be conducted efficiently
and effectively to ensure that the relevant issues are examined
thoroughly. Key elements of alleged misconduct will be prioritized by
the investigator for fact- finding activity bearing in mind the time-frames
set by the Director and resources available.
Integrity and Ethics
Investigators must maintain the highest standards of integrity and ethical
conduct. They must declare any potential or real conflict of interest as
they occur.
Objectivity and Impartiality
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Investigators have a duty of objectivity, thoroughness and observance of
professional standards. The investigator’s findings will be determined in
an unbiased and independent process of information-gathering and
analysis. This will include diligent and timely examination of both
inculpatory and exculpatory facts which may be used to substantiate or
rebut an allegation of misconduct.
Confidentiality
The confidentiality of an internal investigation is established by WIPO’s
Internal Audit There is an obligation of confidentiality relating to
information and evidence obtained during the course of an
investigation.
Scope of investigation
The Director, will independently determine whether any alleged
misconduct should be investigated.
a. the information or evidence provided by the complainant provides
no, or clearly insufficient, specific or credible grounds to indicate
that an investigation is warranted;
b. there is available an obvious better remedy or other better source
of action e.g. referral to the Ombudsman, the Joint Grievance
Panel, or Ethics Officer for the matter stated in the complaint;
c. the complaint relates to a matter of which the complainant has had
knowledge for an unreasonable length of time before the complaint
was submitted, except in the case of allegations of harassment
which may have occurred over a period of time, provided that the
complaint is made within a reasonable period of time since the last
of a series of acts or omissions;
d. the complaint is very minor or trivial;
e. the complaint is considered malicious or defamatory or is made
with knowledge of its falsity, or with willful disregard of its truth
or falsity.
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Process
As a general principle, the investigator should complete the report in a
timely manner as directed by the Director, The Director will review the
report and submit a final report together with findings and
recommendations to the Director General.
Alleged Misconduct
The Director, will ensure that each allegation of misconduct is recorded,
evaluated and processed in a consistent, accountable and confidential
secure system.
Receipt of information
There should be record of any complaint or information of alleged
misconduct, oral or written, from any source including referral by the
Director General
Notification to the complainant
Unless the initial information was received anonymously, an
acknowledgement of receipt of the complaint will be sent to the
complainant in writing. Bearing in mind the need for confidentiality for
the investigation process the Director
Preliminary evaluation of the information
The purpose of a preliminary evaluation shall be:
a. to record the complaint and establish the basic facts
b. to preserve or secure basic evidence whether written or
electronic (such as cheques, invoices, written statements, or
other relevant documents, records or data) that might otherwise
be lost and that may be necessary for the determination as to
whether an investigation is justified
c. to identify any inconsistencies or outstanding questions; and
d. to analyze the evidence to determine whether an investigation
into reported allegations of wrongdoing is justified
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Investigation activity
This is a logical process of information-gathering in respect of alleged
misconduct by interviewing complainants, witnesses and subjects;
seeking corroboration or rebuttal of alleged facts discovered within
relevant records of including document archives, electronic or other
tangible records and obtaining such other evidence as may be relevant to
the investigation.
Conduct of an interview
The investigators will identify themselves, explain in general terms the
nature of the investigation and explain the allegations that have been
made. The name, current post and brief summary of the interviewee’s
career
The interview should be flexibly adapted in response to the behaviour of
the interviewee and the information provided. If the interview is lengthy,
reasonable comfort breaks will be offered and their acceptance or
rejection noted.
Witnesses
Where possible witnesses will be interviewed before a subject Due
diligence must be taken to research all potential witnesses to identify any
reasonable suspicion of complicity in misconduct before an interview is
actually undertaken. If a reasonable suspicion is so identified, the
individual must be treated as a subject and put on notice of that fact
before the interview.
Gathering Evidence
The prime purpose of an investigation is to establish whether
misconduct has taken place or not.
It may be necessary to conduct a search for records or other physical
evidence on the property
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Evidence
Evidence is any type of proof which tends to establish or disprove a fact
material to the case.
An internal investigation may provide evidence in subsequent
disciplinary proceedings. This may include (but is not limited to):
Testimonial evidence, which includes direct and / or hearsay accounts
of individuals who witnessed some event or issue relevant to the
investigation
Documentary evidence which includes any written information created
or received by WIPO
Electronic evidence which includes any computer data base of written,
audio or visual memory, electronic access control systems and any other
physical security system data base
Physical evidence which includes tangible and intangible material
relevant to the investigation, such as goods, equipment or services
rendered
Forensic evidence which includes examination of electronic data,
physical objects such as disputed documents for fingerprints, DNA,
indentations or identification of printing equipment
Evidence handling and secure storage
When records or other items of property are seized by an investigator,
they must be secured in suitable containers which are normally purpose-
made plastic bags sealed with a unique number, to preserve the ‘chain of
continuity’ for subsequent specialist forensic examination; and possibly
for later production during disciplinary proceedings or exceptionally in
any national criminal or civil proceedings.
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Reporting Findings
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Investigation reports will contain a finding, conclusions,
recommendations and a summary of the facts established during the
investigation, fully supported by available evidence