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India’s Vanishing Companies – Is Your Forensic Search On?
For such a computer literate country as India, on which many businesses around the world rely for skilled services, it comes as a shock to read in a Financial Times front-page story (July 15) that 121 companies have vanished there after violating filing rules. With the state of financial crime in India – let alone everywhere else – this is a salutary warning to business to link up without delay with forensic professionals who can help you avoid losing all your assets when such a company disappears into thin air.
Investigations by the Ministry of Corporate Affairs in New Delhi have revealed the identity of the 121 companies involved, which listed on the country’s stock exchanges during the 1990s. But there could be more. Those already uncovered will be prosecuted. The Ministry has also announced that India’s stock market regulator – the Securities and Exchange Board – has banned 100 companies and 378 directors from using the capital markets for five years.
Business people around the world were shocked in early January this year to learn of the Satyam scandal in India. A leading IT outsourcing company, with clients like General Electric and General Motors, the $US823 million fraud was the biggest in the country’s corporate history, causing the company’s share price to drop by 78 per cent and sending India’s benchmark Sensex Index down by 7 per cent. It was quickly nicknamed India’s Enron scandal.
New Spy Chief Slip-Up Highlights Technology Dilemma
Virtually every household’s lexicon is replete these days with terms like Facebook, My Space, Twitter, MSN Chat, hi5 and Skype. As useful as social networking is to many people, we need to consider what happens when this private world meets – if not intrudes upon – the professional domain of business and government? In some cases the answer is disaster. The security, for example, that your firm’s operations depend upon can be obliterated in one innocent flash, and possibly without you even knowing. In this day and age it pays to have experts in forensic investigation on side who can warn you of where your danger spots are. Corporate intellectual property can be exposed by over zealous engineers posting their findings on the web or by marketing personnel giving `sneak’ previews of a new product launch to their Twitter group.
A lesson in how alert you have to be came in Britain a few days ago when the country’s new spy chief, Sir John Sawers, 53, found himself in hot water over his wife’s Facebook page. It was speedily removed by the government after its contents were published in a newspaper. To many, it looked innocent enough: shots of the Sawers and their three children at the beach and a selection of vacation photos. David Miliband, the Foreign Secretary – read Minister – who is responsible for the Secret Intelligence Service (commonly known as MI6), ducked and weaved by claiming that it was hardly a state secret that Sir John wore Speedos.
The problem was that the Facebook site also revealed the location of the family’s London home, transport details and shots of other senior officials with whom Sawers and his wife are friendly. Lady Sawers had imposed no privacy protection on her account and hence it was available to some 200 million users. Currently Britain’s ambassador to the United Nations, Sawers is due to take over MI6 in November. Even before he went to New York, the Facebook site should have been removed for simple security reasons. He was, after all, an MI6 spy himself before he moved on in his career to work in Yemen, Syria, Egypt and Iraq. He has also been closely involved at the policy level with Iran, Iraq and Afghanistan.
Another Ponzi scheme? This time in South Africa
Allegations of a massive fraudulent investment scheme operated by a South African businessman are circulating. Forensic investigators have been hired to obtain evidence confirming that fraudulent means have been used to either inflate or falsify income and performance. Forensic accountants are also said to be examining the available financial transactions for indications as to the methods used to operate the fraud.
The businessman at the centre of the alleged fraud, South African Barry Tannenbaum, has been accused of defrauding dozens of investors in what would be the country’s largest corporate fraud. The funds missing have been estimated at around US$1.2 Billion. Mr. Tannenbaum has publicly denied any wrongdoing and has blamed the recent credit crunch for his company’s woes. Mr. Tannenbaum is currently residing in Sydney, Australia and has given brief interviews to the media there denying that he has taken part in any fraud.
However, some observers have noted the similarities between the woes affecting Mr. Tannenbaum and those which affected Ponzi schemes, such as the infamous Bernie Madoff. These similarities include: Click Here To Read More
Starwood & Hilton Hotels: A case of corporate espionage
The term `corporate espionage’ has been around for decades and is often used by the media to infer a top secret method used by a foreign power to winkle out industrial secrets which could make or break western civilization [Chinese American Scientist Lee Wen Ho, who was accused in 1999 by US Federal authorities of stealing nuclear arsenal secrets for China, springs to mind]. However, far more common than this is the corporate espionage that affects the business operations of everyday entities ranging from small businesses to large corporations. A case in point demonstrating Intellectual Property & Brand Protection abuse involving Hilton Hotels and Starwood are before the courts right now.
The type of information which is usually targeted during a corporate espionage operation is somewhat mundane in comparison to government backed spying operations but can be equally damaging to the victimized organisation. Likewise, the players in these operations tend more to be managers who happen to have access to crucial information due to chance, proximity or reporting structure rather than a grand design by a foreign spy network.
A good example is the recent stoush between the hotel groups Starwood and Hilton. According to media reports, Starwood has accused Hilton of poaching their senior employees as well as stealing thousands of documents regarding their successful W Hotel and St Regis Brands. Hilton denies this. Starwood claims that two of their top executives took with them thousands of documents when they jumped ship to Hilton. These documents supposedly contained the bulk of the Intellectual Property [IP] developed by Starwood over years of operating their luxury chain. This IP included such diverse information as how to negotiate with property developers, training employees, development plans, marketing, demographic data and methods for operating the whole hotel. Starwood contends that this IP is worth tens of millions of dollars and effectively allows a competitor to leapfrog the failures and setbacks of developing their own brand.
Healthy Scepticism - Due Diligence Went Unheeded in Madoff Case
Now that Bernie Madoff is behind bars, and likely to remain there for a considerable time, recriminations have begun to ricochet amongst the various parties responsible for creating and sustaining the largest single fraud in history; investors, advisors, feeder funds, bankers, lawyers, hedge fund managers, regulators and government officials.
One oft repeated line is “How could Madoff continue to get away with this for so long?’ Indeed, had the recent economic meltdown been less severe, Madoff would probably still be operating his massive Ponzi scheme with investors and regulators oblivious to his shenanigans. The benefit of hindsight is usually always good as is the fact that so many are now reflecting on the extent of systems failure but why were those critics decrying Madoff’s financial system long before his collapse ignored.
One of the best known whistleblower’s was Harry Markopolos who spotted Madoff’s Ponzi scheme after an investment firm he worked for tried to emulate Madoff’s methods but failed to reproduce the same steady high earning results. Markopolos warned the Securities and Exchange Commission (SEC) about Madoff’s activities but his cries failed to ignite a serious investigation of Madoff’s affairs.
A number of major investors, including Deutsche Bank and Fund of Fund asset manager Ermitage Group were highly skeptical of Madoff’s operation and declined to invest any funds with him. A healthy suspicion that something too good to be true probably is, resulted in these investors being spared financial Armageddon.
Massive Rise in Fraud as Recession Bites - London Police Overwhelmed
March 27, 2009 |
A recent article on Bloomberg.com highlights the huge increase in fraud being investigated by the City of London Police. Detective Chief Superintendent Steve Head, who heads the City’s Economic Crime unit, was quoted in the article as saying
“The cases we are investigating involve potential losses of around a billion [UK] pounds (US$1.4 billion)” and “While the rest of the force has seen crime declining, in fraud reporting, we’ve seen a massive increase.”
See http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=apwv_rCYhOF8 for the full article.
Fraud Schemes: Watch as they grow
In the month the architect of the largest single fraud in history, Bernie Madoff, pleaded guilty to his part in the US$50billion + fraud and was sent to jail, a rash of similar frauds have begun to surface across the globe. Law enforcement, Forensic accountants and financial crime examiners have continued to be confronted with new and as equally audacious fraudulent schemes which have swallowed up investors funds, left stock markets in utter disarray and pushed Governments to breaking point.
Why are there so many fraudulent schemes all at once?
These schemes comes under the description of `white collar crime’, which has become a catch all phrase for a variety of frauds, manipulations and scams perpetrated by business people or public officials.
World first: Australia’s legal system uses Facebook™
In what is considered to be a world first, the Australian Capital Territory - Supreme Court has determined that the social networking site, Facebook, is an acceptable medium for serving court documents.
“ ‘Facebook™ helps you to connect and share with the people in your life’… including lenders who want to repossess your house and the lawyers who want to enforce it. Employers and scammers are also regularly accessing Facebook details.”
The December 2008 landmark decision was delivered after lawyers from Canberra’s Meyer Vandenberg firm made numerous unsuccessful attempts to serve court notices to Gordon Poyser and Carmel Corbo. The couple had defaulted on a $154,000 loan and a judgement against them for the loan plus interest was made after they failed to turn up to court to defend the matter.
Mark MacCormack and Jason Oliver, lawyers at Meyer Vandenberg, had attempted to personally serve the documents on Poyser and Corbo by visiting both the home and work addresses of the individuals. The papers were also sent to their email addresses. Still unsuccessful, they made a special application to the Court to permit the documents being served on Poyser and Corbo through their Facebook accounts.
