Covering up corruption

Collin Greenland, GUEST COLUMNIST

Notwithstanding the occasional detractors who (reasonably or not) criticise the work of the offices of the auditor general and contractor general, these agencies have demonstrated vigilance and competence in unearthing various forms of corruption over the years.

In recent times, despite resource and other challenges, other agencies such as the Fraud Squad, the Financial Investigations Division, Corruption Commission, Audit Commission, Government Forensic Laboratory, and the Financial Services Commission have all stepped up their game in the island's fight against the monster of corruption that permeates both the private and public sectors.

Despite the laudable work of these agencies, the internal auditors throughout this nation can testify to instances of blatant cover-ups carried out by management personnel in both private- and public-sector organisations that attempt to mitigate or conceal the actions of perpetrators, and elude auditors/investigators.

facing resistance

Auditors and investigators often are major factors in setting the environmental tone regarding the handling of fraud and other corrupt acts of employees. The auditor/investigator, for example, may play a major role in decisions regarding termination, and reporting to the law enforcement, regulatory authorities and insurance claims by an organisation.

However, regardless of how proficiently auditors/investigators approach their roles, investigations may place them in adversarial positions with suspects and they may face resistance before, during and after reviewing questionable activities.

Internal auditors, who are themselves employees of the same company as their suspects, are sometimes particularly at risk, as they may experience auditees/suspects using personal attacks aimed at the investigator by discrediting the investigation and the motives of the investigator.

occupational hazards

Internal auditors have reported a wide array of allegations being made about them before, during and after an investigation such as being overbearing; overstepping authority; disrupting work and office routine; cursing in the office; sexual harassment of staff; encouraging loyal employees to betray confidence; drinking on the job; and so on. If successful, the suspects hope to have the investigator removed from the case, or at times even terminated.

In the attempts to defend against or cover up corrupt acts, auditors must also be wary of certain occupational hazards such as claims of libel and slander, false imprisonment, malicious prosecution, entrapment, coerced confessions, and so on.

In addition, auditors need to know that some investigations carry the danger of possible bodily harm. If the organisation itself is embarrassed, not prepared or otherwise unhappy about the investigation that is being conducted, the auditor, not the crime, may be perceived as the problem, and there can be a real possibility of career damage.

In the case of public-sector organisations, if officers comply with the relevant regulations such as the FAA and PBMA acts, cover-ups would not only be more difficult to carry out, but also more frequently revealed. For example, the FFA Act (Instructions) indicate that once fraud is suspected (yes suspected), the matter should be reported to the police.

Many organisations also hold the mistaken view that if perpetrators of questionable activities repay funds, they are off the hook. On the contrary, subsections 6.44 and 6.45 of the Instructions of the act stipulate that, in those circumstances, the matter should be reported to the financial secretary and the auditor general. Subsection 6.44, in particular, stipulates, inter alia, "It shall be the duty of the accounting officer to report the full details of the loss at once to the financial secretary and to the auditor general, even when such loss has been made good by the person responsible for it."

It is my considered view that if these regulations are complied with throughout the island more stringently, not only would the auditor general's findings and workload greatly increase, but many cover-ups now going undetected would be routinely exposed.

Collin Greenland is a forensic accountant. Email feedback to columns@gleanerjm.com and cgreeny.collin@gmail.com.