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Fraud hits historic high at $3b
Avia Collinder - Business Reporter
Corporate earnings lost to fraud hit $665 million for the first half of this year, prompting the police fraud squad to warn company managers and individuals to be more vigilant in the supervision of employees and pre-paying for goods and services.
But that outcome annu-alised is a more than a two-fold improvement, coming off a spectacular year for crooks in 2008 when monies lost to fraudulent activity passed the J$3 billion mark for the first time in Jamaica's history.
Of recoveries there was no compiled data. The police fraud squad last recorded recoveries in 2007 of $500,000, in a year when scams and embezzlement reached $274.2 million.
Some 75 per cent or 32 of the 48 cases were also 'cleared up' - police jargon for cases closed but not necessarily prosecuted.
The half-year losses to fraud in the current period - amounting to US$2,551,061 and J$437,837,920 - is already more than double the annual losses in 2007. But relative to 2008, the peak year for financial theft, it points to a year-end reduction.
The police say the outcome could be even better if only companies invested more in safe-guarding their earnings.
But when given the opportunity to define where the problem was most widely manifested, Superintendent Colbert Edwards chose to be vague, saying those affected are "right across the board, from shopkeepers to large companies."
Losses under the category of fraudulent conversion were assessed at US$1 million plus J$215 million, and from employee theft or 'larceny as a servant' at $54.2 million. Another pervasive problem, credit card and cheque fraud - obtaining money and goods by means of forged documents - were reported at US$61,967 and J$63 million.
Fraud more often than not is typified as a white collar crime, which the police estimate is a much larger problem than the reported figures indicate as some firms tend to handle embezzlement through inhouse penalties. The banks are more open to discussion on credit card fraud, with National Commercial Bank of Jamaica, for example, partnering with the Fraud Squad on a series of sensitisation seminars for its merchant partners on how to detect scams and crooks.
The bank on Wednesday said it has seen a $15 million drop in card fraud related losses so far this year.
"Overall I think the pattern is trending downwards, but what you find in some instances are pockets of potential risk," said Claudette Rodriquez, assistant general manager - Card Services and e-Channels Unit at NCB.
"There was a problem in St James earlier in the year and then it moved to St Ann. But, we feel it's on the decline and we feel merchants are being more careful. They are asking more questions when in doubt."
Increasing Pressure
But as merchants become more vigilant, credit card users are under increasing pressure to prove their legitimacy even with photographic identification - an annoyance for those who pay with plastic, but a practice likely to be applauded by the Fraud Squad.
Edwards says con artists are being aided in their scams by the use of fraudulent identification cards including driver's licences.
But NCB believes merchants are paying more attention to ID than card security features, which indicate whether the card is valid or not.
"What we ask merchants to do is to ensure that card security features are evident," said Rodriquez.
"They must also ensure that the card user is the actual cardholder. For example, if the name is that of a female, the card should not be presented by a male."
Edwards meantime continues to focus on what employers can do to outflank embezzlers, in an area where his case load has tripled on an annualised basis.
Employee theft, at 48 cases for the first six months of 2009, is already higher than those reported for all of 2008, which was 32.
Poor Accounting Records
According to Supt Edwards, his team's ability to investigate is hampered by poor accounting records or systems and documentation on employees, including current residential addresses.
"They fail to keep even photographs of their employees," he said.
And it is those companies with poor monitoring and recording systems that tend to end up as victims, often failing to detect that they are being defrauded until it is too late.
To address it, he said, insist that staff members take leave at their allotted times, for often those who are embezzling will refuse a rest period to avoid a substitute stepping in and possibly discovering the fraud, the superintendent said.
"Employees must also be subjected to sudden rotation, permitting others to learn their duties; and also examine what they are doing," he added.
Also watch for signs of new-found wealth, but more importantly, audit those books, the fraud investigator said.
avia.collinder@gleanerjm.com
Avia Collinder - Business Reporter
Corporate earnings lost to fraud hit $665 million for the first half of this year, prompting the police fraud squad to warn company managers and individuals to be more vigilant in the supervision of employees and pre-paying for goods and services.
But that outcome annu-alised is a more than a two-fold improvement, coming off a spectacular year for crooks in 2008 when monies lost to fraudulent activity passed the J$3 billion mark for the first time in Jamaica's history.
Of recoveries there was no compiled data. The police fraud squad last recorded recoveries in 2007 of $500,000, in a year when scams and embezzlement reached $274.2 million.
Some 75 per cent or 32 of the 48 cases were also 'cleared up' - police jargon for cases closed but not necessarily prosecuted.
The half-year losses to fraud in the current period - amounting to US$2,551,061 and J$437,837,920 - is already more than double the annual losses in 2007. But relative to 2008, the peak year for financial theft, it points to a year-end reduction.
The police say the outcome could be even better if only companies invested more in safe-guarding their earnings.
But when given the opportunity to define where the problem was most widely manifested, Superintendent Colbert Edwards chose to be vague, saying those affected are "right across the board, from shopkeepers to large companies."
Losses under the category of fraudulent conversion were assessed at US$1 million plus J$215 million, and from employee theft or 'larceny as a servant' at $54.2 million. Another pervasive problem, credit card and cheque fraud - obtaining money and goods by means of forged documents - were reported at US$61,967 and J$63 million.
Fraud more often than not is typified as a white collar crime, which the police estimate is a much larger problem than the reported figures indicate as some firms tend to handle embezzlement through inhouse penalties. The banks are more open to discussion on credit card fraud, with National Commercial Bank of Jamaica, for example, partnering with the Fraud Squad on a series of sensitisation seminars for its merchant partners on how to detect scams and crooks.
The bank on Wednesday said it has seen a $15 million drop in card fraud related losses so far this year.
"Overall I think the pattern is trending downwards, but what you find in some instances are pockets of potential risk," said Claudette Rodriquez, assistant general manager - Card Services and e-Channels Unit at NCB.
"There was a problem in St James earlier in the year and then it moved to St Ann. But, we feel it's on the decline and we feel merchants are being more careful. They are asking more questions when in doubt."
Increasing Pressure
But as merchants become more vigilant, credit card users are under increasing pressure to prove their legitimacy even with photographic identification - an annoyance for those who pay with plastic, but a practice likely to be applauded by the Fraud Squad.
Edwards says con artists are being aided in their scams by the use of fraudulent identification cards including driver's licences.
But NCB believes merchants are paying more attention to ID than card security features, which indicate whether the card is valid or not.
"What we ask merchants to do is to ensure that card security features are evident," said Rodriquez.
"They must also ensure that the card user is the actual cardholder. For example, if the name is that of a female, the card should not be presented by a male."
Edwards meantime continues to focus on what employers can do to outflank embezzlers, in an area where his case load has tripled on an annualised basis.
Employee theft, at 48 cases for the first six months of 2009, is already higher than those reported for all of 2008, which was 32.
Poor Accounting Records
According to Supt Edwards, his team's ability to investigate is hampered by poor accounting records or systems and documentation on employees, including current residential addresses.
"They fail to keep even photographs of their employees," he said.
And it is those companies with poor monitoring and recording systems that tend to end up as victims, often failing to detect that they are being defrauded until it is too late.
To address it, he said, insist that staff members take leave at their allotted times, for often those who are embezzling will refuse a rest period to avoid a substitute stepping in and possibly discovering the fraud, the superintendent said.
"Employees must also be subjected to sudden rotation, permitting others to learn their duties; and also examine what they are doing," he added.
Also watch for signs of new-found wealth, but more importantly, audit those books, the fraud investigator said.
avia.collinder@gleanerjm.com
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