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We report on four key fraud and corruption issues that are emerging as a result of COVID-19 – and what you can do about them.
In March, Deloitte launched its Australian Bribery and Corruption Report 2020 and was one of the first to warn the COVID-19 crisis could elevate the risks of fraud and corruption. Two months on, we report back on four key issues that are emerging – and what clients can do about them.
1. Fraud schemes are being exposed by the change in ways of working.
Radical change to both ways and locations of working is resulting in long-standing fraudulent schemes being uncovered. These abuses unfortunately have consequences that reach beyond the usual impacts of fraud – lost funds, reputational damage and regulatory implications - by diverting resources from critical frontline operations. To this end, it is critical that your staff know how and when to report a concern, and that you have:
2. Organised fraudsters are exploiting assistance programs.
Fraudsters are targeting government assistance programs, and corporate programs to help customers - including those launched by insurers and banks - are also at risk. Some of these programs involve multiple organisations, and serious organised fraudsters are adept at exploiting the gaps between them. To work together to help those in our society most in need, we must also ensure that you:
3. Insider, vendor and subcontractor fraud will increase.
In the wake of the Global Financial Crisis, Ebola in West Africa, and successive humanitarian emergencies like Haiti (2010), Nepal (2013) and the Philippines (2014), we have seen how exceptional economic conditions can lead to people making corrupt decisions. The ‘Fraud Triangle’ theory of dishonest behaviour explains that, with examples including:
Proactivity is the key to stemming these incidents through:
4. A succession of fraud cases, especially from new products and services without appropriate risk management, will create reputational damage to organisations in the public, private and non-profit sectors over the next 12- 24 months.
Many organisations are launching important new projects, programs, products and services to meet market changes due to the crisis. But not all of these new initiatives are properly considering the risks of financial crime, particularly fraud and corruption.
When the crisis abates, both the public and media are likely to explore how Australian organisations responded during the crisis. In our ‘reputation economy’, where your brand’s value can be so rapidly influenced by trust and integrity issues, this could lead to surviving one crisis only to encounter another.
To enjoy the most sustainable post-COVID growth and maintain stable reputations, organisations need to ensure they protect themselves by:
Oliver has helped organisations worldwide to prevent, detect and respond to fraud, corruption and misconduct. He specialises in integrity risk advisory services, anti-bribery and corruption, and the global non-profit sector. Oliver was formerly the in-house head of anti-fraud and corruption for a large international aid agency, and a warranted criminal investigator with the UK’s Serious Organised Crime Agency (SOCA, now the National Crime Agency). His book, Fighting Fraud and Corruption in the Humanitarian and Global Development Sector (Routledge, 2016) is out now, and a follow-up book on terrorist financing in international aid is due out in 2020.