Employee theft raises demand for fraud experts

A recent report by the banking anti-fraud unit showed that theft in commercial banks more than tripled in the third quarter of  this year to Sh1.7 billion. Photo/FILE
A recent report by the banking anti-fraud unit showed that theft in commercial banks more than tripled in the third quarter of this year to Sh1.7 billion. Photo/FILE 

Companies and government agencies are beefing up their anti-fraud departments to counter a rising wave of thefts at the workplace, a majority of which are executed by employees.

The Association of Certified Fraud Examiners, an organisation that trains forensic auditors, says it has recorded an upsurge in the number of inquiries from institutions seeking to put their employees on anti-fraud training programmes.

Chief executive Jane Mugo said demand for forensic auditors has risen as firms and State agencies seek to upgrade the skills of internal auditors, lawyers, and private investigators who are increasingly being called upon to investigate complex fraud cases.

“Last year, we started with only 10 auditors from the government and 12 trainees from the private sector, but this year the number has increased especially from the financial sector and regulatory bodies to 65 officers from the government and 30 from the private sector,” she said.

Forensic auditing


The organisation is among the few private institutions in the country that offer specialised training in forensic auditing.

Ms Mugo said Kenya’s pool of certified fraud examiners increased from 90 to 162 last week following the graduation of 72 trainees from various organisations.

She said demand for training is mainly highest from the financial sector; including big and small banks like the Kenya Commercial Bank, Equity Bank, Southern Credit and Faulu Kenya.

Others were from the Kenya National Audit office and the Capital Markets Authority (CMA).

“Applications are also coming from the insurance industry, the Kenya Anti Corruption Commission and the Criminal Investigation Department,” said Ms Mugo.

A recent report by the banking anti-fraud unit showed that theft in commercial banks more than tripled in the third quarter of this year to Sh1.7 billion.

The CMA anti-fraud unit has also stepped up the hunt for fraudsters in the capital markets, who have stolen millions from stockbrokerage firms.

In its 2010/11 annual report released last week, international risk consultancy group, Kroll Associates, said fraud cases in Africa’s financial services sector are rising at double the rate of theft in companies operating in other sectors of the economy.

Players in the financial services sector said in-house anti-fraud expertise is expected to cut down on investigation expenses as it eliminates the need for hiring experts from abroad or private investigators.

“Fraud is the greatest commercial risk of the day and companies are beefing up capacity to detect and investigate theft in order to stop huge losses that come with not investing in pro-active measures,” said KCB head of group forensic services Faith Basiye, who is also a board member of the Association of Certified Fraud Examiners (ACFE) Kenya chapter.

ACFE is an international professional association of anti-fraud and white collar crime experts based in the US.

Kenya Bankers Association chairman Jimmy Mwithi said most private investigators in Kenya are not competent in investigating complex fraud cases since they lack comprehensive training in auditing, law, finance, risk management and IT skills.

Ms Mugo said already 30 corporate bodies have signed for next year’s sessions, 70 of whom are expected to come from the government.

“This is a new concept in the country. Currently, we don’t have trainers in the country on the issues we are dealing with, the local fraud investigators have no formal and specific training,” she said.

Ms Mugo said the rise in demand is driven by rising cases of fraud especially that committed by insiders in organisations, which she said is the most difficult risk to tame.

Most financial institutions in the country rely on personnel from other institutions to investigate internal fraud.

Most investigators, she said, are former police officers who have no relevant skills for detecting and formulating policies to occurrence of fraud.

Scale down

“Over eight insurance companies in the country have collapsed due to cases related to fraud, hence the need for the training.” said a senior general manager at the Association of Kenya Insurers (AKI), Benson Akwir, adding that 30 per cent of the losses incurred in general insurance arise from fraud, in which clients collude with some officers in underwriting departments to steal from the companies.

“Regular checks by trained experts could help to scale down these incidents,” he said.

Players in the insurance industry attribute over 30 per cent of the losses in claims especially in motor general insurance to fraudulent claims.

“CMA is committed to taming the rising cases of fraud among market players in which investors’ money has been lost. We expect the training to boost our capacity to tame rogue brokers and other malpractices among market players,” said an official in the capital markets anti fraud unit who graduated from the course, but sought anonymity as he is not authorised to speak for the authority.

The official said the CMA anti-fraud unit has investigated suspicious dealings in firms purporting to be licensed financial advisers.