 |
21 February 2006
White collar crime can be combated - eQuals White collar crime, including insurance fraud and irregular accounting from companies, is costing the worldwide economy - and shareholders - billions of dollars each year. One of the key ways to fight this scourge is if employees are more willing to stand up and blow the whistle on fraud. Management should also realise that there are specialised companies that provide systems and "clever processes" that are designed to prevent crime in the insurance industry. This is according to Corne du Toit, group executive of the insurance division at specialist business process outsourcing company, eQuals Group (Pty) Ltd, the SA subsidiary of the London-listed The Innovation group plc (TiG). Du Toit said there are "resolvable systems" which dictate how much is going to be paid, and to who. "Employee fraud, therefore, is rendered impossible; but not enough companies are resorting to these solutions from third party companies." Commenting further, he said it is also important that companies - and the law itself - motivate employees to report observed incidents of fraud or unethical conduct. Companies, he said, need to take consistent disciplinary action whenever employees are caught committing acts that either violate the law or breach the organisation's code or ethics or conduct. "It is also equally important to publicise the disciplinary actions. Companies, on a regular basis, should issue a summary of the incidents of wrongdoing that were reported to management and that resulted in disciplinary steps being taken. More importantly, the confidentiality of whistleblowers needs to be observed. This is at the core of combating fraud." He said insurance fraud, for instance is a habitual and ongoing problem - but receives scant attention from the police and judicial system both here and abroad. "This is partly because insurance fraud - and other fraud - is seen as a 'victimless crime' But this couldn't be further from the truth." He did say, however, that outsourcing specialists, such as eQuals, could put water-tight systems – and checks and balances -in place; these can stop "collusions with staff claims" by allocating service providers directly. With the right systems fraud can be effectively combated,” he said. Org Geldenhuys, a director of Pretoria-based IT recruitment agency, Abacus Recruitment, said that with the apparent rise in the number of corporate scandals both overseas and locally, ethics and mindsets should shift, with employees - besides just the press and the relevant authorities - taking a "Some of the corporate collapses of recent years, such as Enron, Parlamat and Worldcom have ended up affecting the lives of thousands of people. "It must be a dilemma for an employee to make the right decision when he or she uncovers corporate malfeasance in the boardroom, such as fiddling the figures to show a rise in sales when there is actually a fall. Listed companies are particularly prone to this questionable type of accounting - and this is often due to the fact that they feel compelled to protect their share price at any cost. But perhaps employees should not be regarded as pariahs if they blow the whistle on these activities," Geldenhuys suggested. |