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  • FRAUD & REGULATORY ENFORCEMENT

    A N N UA L R E V I E W 2 0 1 3

  • Published by

    Financier Worldwide

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    Copyright 2013 Financier Worldwide.

    All rights reserved.

    Annual Review April 2013

    Fraud & Regulatory Enforcement

    No part of this publication may be copied, reproduced, transmitted

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    Whilst every effort is made to ensure the accuracy of all material

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    Any statements expressed by professionals in this publication are

    understood to be general opinions and should not be relied upon as

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    Opinions expressed herein do not necessarily represent the views of the

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    a member.

  • A N N U A L R E V I E W F R A U D & R E G U L ATO RY E N F O R C E M E N T

    XX XX XX

    F i n a n c i e r Wo r l d w i d e c a n v a s s e s t h e o p i n i o n s o f l e a d i n g p r o f e s s i o n a l s a r o u n d t h e w o r l d o n t h e l a t e s t t r e n d s i n F r a u d & Re g u l a t o r y E n f o r c e m e n t .

    F ra u d & Re g u l a t o r y E n fo rc e m e n tA P R I L 2 0 1 3 A N N U A L R E V I E W

    UNITED STATES ........................... 04Randall WilsonRGL Forensics

    CANADA ..................................... 08W. Michael G. OsborneAffleck Greene McMurtry LLP

    CAYMAN ISLANDS ...................... 12Martin LivingstonMaples and Calder

    BRAZIL ........................................ 16Eduardo SampaioFTI Consulting Brasil

    ARGENTINA ................................ 20Andrea ReyErnst & Young Argentina

    COLOMBIA .................................. 24Laude FernndezFTI Consulting Colombia

    UNITED KINGDOM ...................... 28Lil ia SantosCRI Group

    GERMANY ................................... 32Benno SchwarzGibson, Dunn & Crutcher LLP

    FRANCE ...................................... 36Philippe GoossensAltana

    THE NETHERLANDS ..................... 40Martijn HinBDO Consultants B.V.

    SWITZERLAND ............................ 44Marcel MeinhardtLenz & Staehelin

    AUSTRIA ..................................... 48Claudine VartianDLA Piper Weiss-Tessbach

    LUXEMBOURG ............................. 52Sandrine PeriotKPMG Luxembourg S. r. l .

    AUSTRALIA ................................. 56Owain StoneKordaMentha Forensic

    CHINA ........................................ 60Harvey PackhamAlvarez & Marsal Consulting

    SINGAPORE ................................ 64Matthew FlemingKordaMentha Forensic

    MALAYSIA ................................... 68Joyce Lim Wan CheakErnst & Young

    PAKISTAN ................................... 72Muhammad SohaibCRI Group

    UNITED ARAB EMIRATES ............. 74Zafar I . AnjumCRI Group

    SOUTH AFRICA ........................... 78Pierre Kil ianBDO Risk Advisory Services (Pty) Ltd

    KENYA ........................................ 82Peter KahiErnst & Young Kenya

  • A N N U A L R E V I E W F R A U D & R E G U L ATO RY E N F O R C E M E N T

    4 F I N A N C I E R W O R L D W I D E A P R I L 2 0 1 3

    UNITED STATESRANDALL WILSONRGL FORENSICS

    WILSON: We have seen a noticeable rise in the discovery and resulting

    prosecution of fraud, bribery and corruption cases. Interestingly, with the

    increase in awareness of the potential, magnitude and pervasiveness of

    these crimes, it is surprising that these crimes continue to be discovered

    at alarming rates. One of the primary factors in my view is the continuing

    effect of the economic recession in the US that began in the late 2000s.

    The lingering slow economic growth since the recession of 2008 and

    2009 coupled with the continuation of relatively high unemployment

    has provided ongoing motivation for fraud and corruption, especially in

    the occupational fraud categories such as misappropriation and financial

    statement fraud. Although, greed and need remain as ongoing motives for

    the commission of these crimes. Another factor that we have seen as the

    fallout of the economy and reductions in workforce that have occurred

    since the recession began is the strain on segregation of duties and resulting

    reduction in functionality and effectiveness of internal control systems.

    WILSON: Fraud appears as it is discovered and investigated. In that

    context, we are continuing to see large scale mortgage fraud cases

    dominating the landscape. Similar to a bankruptcy situation, the entity

    that is upside down due to significant reductions in property values

    (or income) as compared to the outstanding debt (or expense) on the

    property too often leverages today on the anticipation of tomorrows

    improvement in property values. When that value or income increase

    doesnt materialise, the result is an inability to meet ones debts as

    they come due and the situation is ripe for the prospect of motive to

    commit fraud. Another alarming trend is the continuing discovery of

    Ponzi schemes. The incidence of discovery of Ponzi type investment

    schemes is seemingly unabated with large magnitude cases continuing

    to occur. One such case discovered just last year was a massive internet

    Q TO WHAT EXTENT HAVE

    YOU SEEN A NOTABLE RISE

    IN THE LEVEL OF CORPORATE

    FRAUD, BRIBERY AND

    CORRUPTION UNCOVERED

    IN THE UNITED STATES IN

    RECENT YEARS?

    Q ARE THERE ANY SPECIFIC

    TYPES OF FRAUD THAT

    SEEM TO BE APPEARING

    MORE FREQUENTLY IN THE

    CURRENT CLIMATE?

  • A N N U A L R E V I E W F R A U D & R E G U L ATO RY E N F O R C E M E N T

    A P R I L 2 0 1 3 F I N A N C I E R W O R L D W I D E 5

    continued...

    8

    UNITED STATES RANDALL WILSON RGL FORENSICS

    Ponzi scheme that was reportedly in excess of $600m. There also

    does not seem to be an abatement in the volume and magnitude of

    occupational fraud cases such as embezzlement and financial statement

    fraud. Collusion of employees with outside parties such as vendors and

    suppliers also continues to be a category of concern.

    WILSON: The Dodd-Frank Act continues to dominate the landscape of

    regulatory changes in the United States in that it provides the SEC with

    the authority to reward tipsters whose information leads to significant

    monetary sanctions against entities and individuals committing such

    frauds. In addition, mortgage securities fraud has prompted regulatory

    changes to address those issues. One such change that is notable is a

    renewed vigour and frequency on the part of regulators in enforcing

    existing laws such as Antitrust or the Foreign Corrupt Practices Act (FCPA)

    which seems to be experiencing an increase in suits and prosecution.

    WILSON: The US Justice Department and the current presidential

    administration have clearly stated that fraud prevention is a priority,

    which has resulted in an observed increase in cases that are filed and

    won against perpetrators. The administration created a Financial Fraud

    Enforcement Task Force which has augmented the resources in this

    area. There is a contemporaneous battle going on in the fight against

    cyber-crime, which is a significant threat and corollary to the fight

    against fraud and corruption. It appears that these battlegrounds are

    testing the available resources of the system to combat them, yet it

    appears that the US government has the resolve to continue the fight

    with appropriate resources.

    Q HAVE THERE BEEN ANY

    REGULATORY CHANGES

    IMPLEMENTED IN THE

    UNITED STATES THAT ARE

    DESIGNED TO COMBAT

    FRAUD AND CORRUPTION?

    Q DO REGULATORS IN

    THE UNITED STATES HAVE

    SUFFICIENT RESOURCES TO

    ENFORCE THE LAW IN THIS

    AREA? ARE THEY MAKING

    INROADS IN THIS AREA?

  • A N N U A L R E V I E W F R A U D & R E G U L ATO RY E N F O R C E M E N T

    6 F I N A N C I E R W O R L D W I D E A P R I L 2 0 1 3

    continued...

    UNITED STATES RANDALL WILSON RGL FORENSICS

    WILSON: With the advent of the Office of the Whistleblower (OWB)

    established by the Dodd-Frank Act, companies are clearly at more risk

    of regulatory investigation and its resulting probability for prosecution.

    Generally speaking, the penalties range from written warnings that

    may be released and covered by the media to financial penalties, suits

    filed against both corporations and the individuals involved, restrictions

    in abilities to operate in non-compliance areas, as well as the subjective

    financial consequences that come from high-profile corruption impact

    on a companys reputation and revenues.

    WILSON: The Dodd-Frank Act provided the SEC with the authority

    to provide financial rewards to whistleblowers and the Office of

    Whistleblowers (OWB) has bee