Case Study- Investigation of Conflict of Interest

Case Study: Investigation of Conflict of Interest

As a forensic auditor, I had the privilege to investigate and gained experience on a case of conflict of interest in the Middle East related to closure of stores at retail major.

The case came to the notice as an incident was raised through a tip off from a team member of the concerned team. It was initiated from the tip saying that the employee responsible for the closure of stores was getting it done through spouse Vendor Company.

The above condition in business terms is commonly known as “Conflict of Interest”: which means having one’s own interest (employee/spouse/immediate family) similar to that of the company one is working for and non- disclosure of same at the time of employment.

Methodology

1. Getting details of the said vendor- on boarding process
2. Study of the process for empanelling vendors
3. Sampling of work done over the tenure of the employee at the firm
4. Comparison of details of the sample and study of competitor quotations
5. Online search and discrete calling to competitor vendors to ascertain details
6. Access to and review of electronic data of the employee (official)- emails and user files
7. Access to HR file of the employee
8. Meeting with the line managers and information to HR before initiating said case

Observations/ Evidence

1. Name of the vendor as per the trade license and employee spouse name in HR file was same
2. Employee had not signed the conflict of interest declaration
3. The process of 3 comparative quotations for a job was not followed
4. Majority of jobs given to spouse vendor as time shortage was quoted to do the job
5. Vendor was shortlisted by employee itself basis 3 quotes. Only selected vendor sent for approval
6. Quotes received from employee were in mails post the team asking for them date and time
7. On printing certain quotes a blank page with single line got printed- Fake/ Falsified quotations
8. Study of the properties of document revealed they were created in Adobe Photoshop
9. Quotes are generally received in unalterable format like PDF or Word unlike editing tools above
10. Properties of the document further revealed common author (spouse vendor) across comparative quotes
11. Interview with employee with HR and line managers led to complete denial of above facts

Recommendation

1. Termination of the employee in light of the corroborated evidence above
2. Background checks should be carried out by manager who approves/ awards
3. Vendor should be shortlisted by approving manager basis all comparative quotes not sole vendor
4. Conflict of interest declaration must for every employee. Yearly renewal for employees having vendor interaction
5. Quotes to be only accepted in unalterable formats- PDF and Word or hard copy of quotes to be filed
6. Manager has to ensure process of 3 comparative quotations to be duly followed before awarding job
7. Documented exception approval from approving manager to be taken in case of need

Would be sharing further inputs in future articles. For fraud risk awareness training for corporate and write-up please contact me on the below:

Raunaq Chawla
http://raunaqchawla.blogspot.ae/
craunaq.1987@gmail.com
+971-562642495/ +91-9650668585

Happy to help with a smile!