Corruption Profile # 5

As you may know, acts of corruption come in many shapes and sizes. Throughout the course of the next few weeks, we will explore some of these acts in brief in our Corruption Profiles. These profiles will take a look at a number of ways in which people “cook the books”. Last week we looked at Embezzlement and Undue Influence. This week: Extortion and Fraud

Today: Fraud

How can fraud be defined?

Transparency International defines fraud as “the act of intentionally deceiving someone in order to gain an unfair or an illegal advantage (financial, political or otherwise). Countries consider such offenses to be criminal or a violation of civil law.”

What is an example of fraud?

Victims of food fraud range from the local consumer to large companies.

In 2010, the Washington Post reported that the Food and Drug Administration (FDA) had been pressured to combat rising food fraud. The FDA is largely responsible for the accurate labelling of food products, among other things, and the United States food industry says that federal regulators are not doing what they can to put a stop to food fraud. A number of cases were mentioned in the article, such as the following:

Some honey makers dilute their honey with sugar beets or corn syrup, yet they market their product as 100 per cent pure and charge a premium price.

Peter Xuong Lam, president of Virginia Star Seafood Corporation of Fairfax, was convicted last year of selling mislabelled catfish. He had imported 10 million pounds of cheap, frozen catfish fillets from Vietnam and sold them to national chain retailers and wholesalers as grouper, red snapper and flounder, all of which have greater commercial value. He was sentenced to five years in prison and has been barred from importing fish from abroad for 20 years.

What is a possible solution for fraud?

A report by Ernst &Young, Emerging Stronger: India Combats Fraud, states that “historically, organisations have focused more on protecting themselves against external threats of fraud.” However, a survey which they carried out (the details of this survey are found in the report) shows that employees pose the greatest security threat to an organisation, due to the access they have to sensitive company data and information.

The institute of Internal Auditors, The American Institute of Certified Public Accountants, and The Association of Certified Fraud Examiners in the United States have made a number of recommendations concerning the prevention and detection of fraud in the following publication: Managing the Business Risk of Fraud: A Practical Guide.

Some of their recommendations are the following:

As part of an organisation’s governance structure, a fraud risk management programme ought to be set up. This programme ought to constitute both prevention and detection measures to counter fraud. Prevention measures may include thorough background checks performed on potential employees (limiting the possibility of hiring persons suspicious of untrustworthy behaviour), and mandatory anti-fraud training. Such training may take place upon initial orientation and ought to be implemented as on-going education with periodic updates and refresher training sessions. The purpose of these training sessions would be to familiarise employees with the organisation’s fraud risk management programme (which may evaluate a company’s code of conduct and ethics, define what constitutes fraud, and instruct employees on what to do when they suspect any incidences of fraud). This serves to establish and reinforce an organisation’s commitment to its anti-fraud policy/policies.

Detection measures may include a whistle-blower hotline. This is one of the most effective measures that organisations can implement into their fraud risk management programmes. Ideally they offer a multilingual service 24 hours a day, 365 days a year. Informing all stakeholders about the existence of this hotline will help to raise awareness of it, and encourage the use of it. The anonymity of any individual who reports suspicion of fraud should be strictly observed and all reports should be attended to appropriately and timely.

Fighting Fraud Together: the strategic plan to reduce fraud published by Home Office (UK) is another source which offers useful information about raising an awareness of fraud, implementing preventative systems to keep fraud at bay, and strengthening due punishment for acts of fraud committed.

Image: Ben Lawson (CC License)

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It’s the New Economy, Stupid

While Obama’s policies have the short-term potential to improve the lives of many Americans beleaguered by the economic slump, the approach he champions is insufficient to tackle the long-term problems we face.

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Fair Trade Beyond 2015 Campaign Launched to Influence UN MDGs

On 10 November, the Fair Trade Beyond 2015 Campaign was launched in Poznan, Poland at the 6th International Fair Trade Towns Conference, which was attended by many across the Fair Trade movement. The aims of the campaign are big – the creation of a just and equitable world. It will unite local leaders, civil society and the private sector in a call for fair and ethical trade rules so that they can be incorporated into the new development framework when the United Nations Millennium Development Goals expire in 2015.

More at Fairtrade International post

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Children in the fields: Young children picking our food – NBC Latino

Children in the fields: Young children picking our food
NBC Latino
From the tobacco fields in North Carolina to the grape vineyards in California, thousands of children are working long hours in the filed, often in tough conditions, all to provide food on the table for Americans across the country. NBC's Bay Area

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Unemployment Insurance Weekly Claims Report

In the week ending November 24, the advance figure for seasonally adjusted initial claims was 393,000, a decrease of 23,000 from the previous week’s revised figure of 416,000. The 4-week moving average was 405,250, an increase of 7,500 from the previous week’s revised average of 397,750.|||||||http://www.dol.gov/opa/media/press/eta/ui/eta20122343.htm

Gap pulls out of Bangladesh fire safety program

On October 2, after over a year of discussions with trade union and labour rights organizations, Gap Inc. announced that it is refusing to participate in a groundbreaking fire safety program for the garment industry in Bangladesh. Instead it decided to set up a separate program, accountable to no one – least of all worker representatives.

read more

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RPT-”Sans-culotte” minister alarms investors in France – Reuters


Economic Times
RPT-"Sans-culotte" minister alarms investors in France
Reuters
Yet Montebourg's tirades portray poor image of France. * Business world concerned Montebourg will put off investors. By Catherine Bremer. PARIS, Nov 28 (Reuters) – Snarling at bosses who shut down factories, bashing low-price Asian exporters and
France's Nationalization Threat Ignores Steel GlutBusinessweek
France's employers' union slams government for 'blackmailing' ArcelorMittalEconomic Times
Pressure on Lakshmi Mittal to give up Florange plant in FranceNDTV
Firstpost -Rediff
all 810 news articles »

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Conflict Minerals in Your Mobile—Why Congo's War Matters

Global financial markets don't pay much attention to the conflict in the The central African country produces major quantities of tin and tungsten,
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Fishing under fire in Gaza – photos

Since January 2009, the government of Israel has restricted Palestinian fishing boats to three nautical miles from Gaza’s coast – a limit enforced by live fire

Since January 2009, the government of Israel has restricted Palestinian fishing boats to three nautical miles from Gaza’s coast, blocking access to around 85 percent of Palestinian fishing water.

For the enterprising fisherman, venturing further out in search of bigger fish is a risky business: the fishing limit is enforced by live fire.

Now fishermen have been allowed to fish up to six nautical miles from Gaza’s coastline after a cease-fire deal was reached between Israel and Hamas on 21 November. A relief for many – but with no formal agreement to increase the limit, those who rely on the income they earn from a daily catch are worried about how long the new limit will last.

Read the blog: Fishing under fire in Gaza

Photos: David Levene/Oxfam

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