Seminar discusses banality of fraud

Duarte Trigueiros

A  seminar on fraud and ways to detect it in modern businesses and public institutions was held last week at the Master in European Studies Alumni Association, Macau. The seminar, which was titled “Fraud Prevention and Detection: Methods, Technologies and Vendors”, was delivered by Duarte Trigueiros, who is a visiting professor at the University of Macau.

During the seminar, Trigueiros was keen to stress the banality of fraud; that it is less a premeditated act undertaken by “fraudster professionals” and more commonly committed by everyday people presented with conditions conducive to the act.

He said that there are three conditions that work in tandem which tend to result in fraud: “opportunity”, “motivation” and “justification.” When these three conditions align, fraud becomes possible.

“Some people are educated in such a way as to be prone to extreme competition. Even as children, they must win – so much so that they will even cheat.” He admitted that there are exceptions but maintained that “these people are more likely to commit fraud.”

“However, aside [from the exception] most people are not born fraudsters,” he noted, stressing that opportunity was a far more likely determinant of fraud. “Professional fraudsters are very few; perhaps only [accounting for] 10 percent of cases.”

When it comes to Macau, Trigueiros believes that there are urgent steps needed regarding the increase in reporting mechanisms as a method of deterring or preventing fraud.

“There is a lot to be done in terms of regulation in Macau: there needs to be better mechanisms of reporting fraud anonymously.”

He added that tip-offs from whistleblowers is an extremely important way of uncovering fraud and those who provide information in this manner must be protected and encouraged.

“You must protect whistleblowers because this is how we [fraud detection experts] usually discover fraud!” he exclaimed.

Fraud, which is defined by the professor as necessarily including “deception” (money laundering is not necessarily considered to be fraud by itself), exists worldwide but has a relatively high occurrence in Macau.

Some of the most high-profile cases of fraud and alleged fraud in the MSAR in the last few years include the case of junket promoter Dore Entertainment and the allegations of more than 1,500 counts of the crime leveled against the former Public Prosecutor General, Ho Chio Meng.

In the former case, an employee of Dore Entertainment was accused last year of stealing hundreds of millions of Hong Kong dollars from the junket and then fleeing the city.

In Macau where exposure to such large sums of money provides at least the first condition necessary for the offence – opportunity – Trigueiros says that authorities commonly take steps to reduce the proximity or the frequency with which any single employee is proximate to considerable sources of wealth.

“In Macau it is customary to rotate personnel in areas of high risk because fraud is so common,” he commented, praising it as a relatively effective method of prevention.

However, Trigueiros also warned that prevention alone is not sufficient if organizations want to tackle fraud effectively. He said that institutions responsible for reducing fraud must also focus on detection, response and monitoring strategies and mechanisms.

He concluded that greater follow-up in these three other areas may help institutions in the MSAR to combat fraud more effectively in the future.