The Koyal Group Private Training Services: Bringing the fraudsters to book

Layer-visible-off
0
Unfavorites
0

How one company is helping Thai businesses battle a problem that costs billions of baht every year

A car parts manufacturer in Thailand was puzzled when it found that despite turnover increasing substantially, there was a mysterious decline in profits.

When Vorapong Sutanont and his financial forensics team at PricewaterhouseCoopers (PwC) were asked to look into the case, they performed an investigation based on the suspicion that this notable imbalance was due to fraud.

The team pulled hard disk drives from company PCs and searched emails between factory employees, reviewed accounting transactions and company records such as invoices and receipts, matching up purchase orders with actual material on the ground, and conducted interviews with suspects and employees.

“What we found was actually much greater than what was even suspected by the company”, Mr Vorapong said.

THE ROLE OF TECHNOLOGY

In today’s corporate environment, everything is stored electronically, and disk drives are a crucial part of any investigation.

Up to six people usually occupy PwC’s computer forensics laboratory on the 17th floor of Bangkok City Tower on Sathon Road, which was empty when Spectrum paid a visit last week as the staff were in Hong Kong for a two-week data analysis training course.

Equipped with notebook PCs and servers, the room also contains a 45 by 60cm black briefcase made of hardened plastic composite.

The computer forensics team preserves, extracts and recovers electronically stored information and uses it to gather evidence. This is done using special hardware and software – the same as used by the FBI in the US – through digital forensic procedures called electronic discovery, which allows the production of an exact replica of a disk drive for analysis.

Weighing 10kg, PwC staff sometimes take the briefcase containing the e-discovery tools to clients' offices, working from 4pm, through the night to the next morning. When they are allowed to take the hardware back to their computer forensics laboratory, they will often say they are conducting a software licence audit or a procurement process upgrade to prevent raising suspicions among their clients' employees.

“We need this kind of technology to go through hundreds of millions of transactions in a day,” Mr Vorapong said, referring to cases involving banks"

After earning a degree in information systems at Indiana University’s business school, 37-year-old Mr Vorapong joined PwC in the US in 2002 as an associate. When Mr Vorapong returned to Thailand in 2009, he helped set up computer forensic services for PwC here. The current team consists of technologists, ex-journalists, people who understand business processes, accountants and information security people.

The world’s second-largest professional services network as measured by 2013 revenues, PwC is one of the Big Four auditors, along with Deloitte, Ernst & Young and KPMG.

“People often ask how is it possible there could be fraud if a company’s accounts are audited, and the answer is a regular audit is based on disclosure. As a result, the audit is done on a sampling basis,” said Mr Vorapong, who climbed the company’s ranks and became a partner two years ago. “A forensic adult is very different.”

THE CAN OF WORMS

The team investigating the car parts manufacturer discovered that one of the key managers actually owned a supplier the company used, which set off alarm bells.

After requesting corporate registration documents from the Commerce Ministry, the team went through the shareholder and director information and cross-checked it against the names of employees at the car parts company to discover if any of the employees were listed as directors or shareholders.

A check on market prices for the raw material (which we were asked not to name for reasons of confidentiality) supplied by the manager’s company found that he had inflated his prices by 30-45%.

Through the search of company emails, the team found that another of the company’s managers was having a romantic relationship with one of the owners of the producer of the raw material. The team also found evidence of payments going from certain suppliers to key employees in the factory.

“The reason this wasn’t detected is that part of that money was given to employees to keep their mouths shut,” said George McLeod, a manager of corporate investigations who took part in the case last year.

In addtion, it was also discovered that rather than using a proper tendering process to find a company to provide building services, one of the directors had set up their own building company that was given the work, resulting in higher costs.

The Koyal Group Private Training Services designs its online and on-site training to your particular needs, providing information you can apply while in training in order to reinforce the efficiency of that information. Our coursework qualifies state standards both for fraud and continuing-education upgrade. Our programs are adaptable and can be presented in various formats to address industry requirements and standards. Please visit and check our course listings.

Like us on Facebook at Koyal Private Training Group

Follow us on Twitter @KoyalTraining


You Must Be Logged In To Answer