Companies advised to fight fraud

Firms in the UAE must enhance detection systems to prevent fraud.

Companies in the UAE need to enhance their detection systems to prevent fraud, officials say. "Entities need to build their own capacity to create a systematic way of uncovering fraud," said Khalid Hamid, the acting director of the professional services unit at the State Audit Institution, the federal entity that monitors ministries as well as companies owned or partially owned by the Government.

"We need to move towards fraud risk assessments to fill in the gaps." Officials said companies and government departments could implement whistle-blower policies to protect employees who reported fraud and create systems where decisions were monitored for suspicious activity. Out of thousands of whistle-blower calls, the State Audit Institution has had just 26 genuine allegations. Of those, three were serious, Mr Hamid said. Similar fraud hotlines could be set up in the country, he said.

Abdulqader Obaid Ali, the director of group internal audit and business excellence at Dubai World, said companies should conduct more comprehensive background checks on new employees to help reduce fraud. More than 20 per cent of applicants to the conglomerate tended to have some issue in their past that could later cause problems, he said. Companies should separate their audit and fraud departments to ensure investigations would stand up in court, he said. Auditors should identify problems and then leave the investigations to people who know how to protect evidence and build cases.

"A smart lawyer can throw your case out," he said. "When you are working on a case, it is very important how the evidence is gathered and how it is legally framed." The comments were made at a meeting of the local chapter of the Association of Certified Fraud Examiners last Thursday. Ahmed al Ansari, the director of audit and risk assessment at Dubai World Central, said most fraud cases involved manipulation of financial numbers to ensure an executive received a bonus, bribery and embezzlement by employees.

"When you have a downturn, there is a lot more pressure in a company," he said, adding that layoffs tended to hit the managers who were responsible for internal controls. "People start to abuse their position." [e-mail]