Cases

Company: Good Wood Engineering (mid-sized construction contractor)
Department: Procurement

Key People Involved:
Jimmy Simon: Senior Procurement Manager
VKS Supplies, Sean Peterson: Potential Vendor
Anthony Lee: Internal Audit

Background:
Good Wood Engineering regularly buys building materials from multiple suppliers. To maintain fairness, all vendors must go through a transparent quotation and evaluation process.

Prices, delivery timelines, and product quality are used to determine the most suitable vendor.

Incident Overview:
VKS Supplies was one of several vendors bidding for a contract worth USD2 million to provide steel reinforcement materials for an upcoming project.

During the tender evaluation period, the sales manager from VKS Supplies , Sean, approached Jimmy privately.
He invited Jimmy to a luxury restaurant and later offered him an overseas vacation package worth USD8,500 in exchange for ensuring VKS Supplies won the tender.

Jimmy agreed and manipulated the evaluation scoring sheet to favor VKS Supplies, giving them higher marks for quality and reliability, despite VKS Supplies being neither the cheapest nor the highest quality option.

Red Flags Noticed:
Several anomalies triggered suspicion:

Red Flags:
1. Evaluation scores were unusually high for VKS Supplies.
2. Other suppliers were significantly more cost-effective.
3. Procurement officer insisted on “urgent approval”.
4. Vendor relationship appeared overly friendly.

An internal auditor reviewing procurement cycles noticed the scoring irregularities and initiated a deeper audit.

Discovery:
During the audit, WhatsApp messages and email exchanges revealed discussions between Jimmy and Sean about “holiday arrangements” and “making sure we get the contract.”

Further tracing of financial transactions found the vacation package had been paid by VKS Supplies and issued in Jimmy’s spouse’s name.

Jimmy confessed when questioned.

Consequences:
1. Jimmy was terminated from employment and charged under anti-corruption laws.
2. VKS Supplies was blacklisted from all future tenders with Good Wood Engineering.
3. Good Wood Engineering lost public trust impacted; required to strengthen internal procurement controls.

Root Causes:
1. Lack of independent scoring review.
2. Weak conflict-of-interest declaration process.
3.No periodic procurement staff rotation..
4. Inadequate anti-bribery awareness training.

Preventive Measures:
Good Wood Engineering implemented the following improvements:
1. Mandatory Conflict of Interest Declarations for procurement officers.
2. Dual-signature approval on vendor scoring and awards.
3. Annual Anti-Bribery & Corruption (ABC) Training.
4. Whistleblower Hotline and anonymous reporting channel.
5. Rotation of procurement staff every 2 years.

Organisation: City Waterworks Authority (Government-linked utility provider)
Department: Infrastructure and Development

Key Individuals:
Dezosa John – Senior Project#Manager
Waterfall Engineering – Private contractor
Mary James – Internal Compliance Unit

Background:
The City Waterworks Authority (CWA) oversees water infrastructure projects, including pipe installations and water treatment system upgrades. Contractors must bid for work through a strict tender evaluation process to prevent unfair advantage and ensure value for public funds.#The authority announces a USD 25 million project to upgrade pumping stations in several districts. Multiple engineering firms submit proposals.

Incident Overview
During the tender review, Waterfall Engineering was not expected to win. Their proposal cost was 15% higher than other bidders and their track record had several delays in recent projects.

However, Waterfall Engineering won the contract.

An anonymous whistleblower reported that Dezosa had received undisclosed personal benefits from Waterfall Engineering , including:

• A condominium unit paid under his spouse’s name.
• Frequent all-expenses-paid overseas golf trips.
• Monthly cash payments disguised as “consultation fees”.

In exchange, Dezosa influenced the scoring panel, rewriting technical evaluation reports to favor Waterfall Engineering and pressuring committee members to “follow his recommendation.”

Red Flags Noticed
1. Vendor selection did not match the scoring rationale.
2. Unusual wealth displayed by the project manager.
3. Contractor payments appeared round-numbered and frequent.
4. The project manager actively excluded others from negotiation.

Discovery
The Compliance Unit began reviewing procurement after the anonymous whistleblower report.

During a conflict-of-interest disclosure audit, they discovered:
1. Property records showing a condominium purchased by Waterfall Engineering, but registered to Dezosa’s spouse.
2. Travel records linking Dezosa’s trips to Waterfall Engineering’s corporate expense claims.
3. Email exchanges referencing “continued partnership incentives” and “ensuring future cooperation”.

Dezosa initially denied wrongdoing but later confessed when confronted with evidence of financial transactions.

Consequences
1. Dezosa was dismissed from public service, prosecuted under anti-corruption law, sentenced to prison.
2. Waterfall Engineering was blacklisted from all government contracts for 7 years; fined heavily.
3. City Waterworks Authority was subjected to external audit, public inquiry, and reputational damage.

Root Causes Identified
1. Lack of independent vendor evaluation review.
2. Failure to verify employee asset declarations.
3. Over-reliance on a single project manager to influence final decision.
4. Weak whistleblower protection visibility before the incident.

Corrective and Preventive Measures
1. Mandatory Asset Declarations for high-risk roles are refreshed annually.
2. Procurement Committee Rotation every 18 months.
3. Implementation of a Vendor Due Diligence and Integrity Screening System.
4. Whistleblower Hotline reinforced with anonymous and third-party reporting channels.
5. Annual Anti-Corruption and Ethics Certification training for all procurement staff.

Company Affected: Golden Asset Advisory (a licensed financial advisory firm)
Industry: Finance & Wealth Management

Key Individuals:
Mr. Sylvester, Client Relationship Officer
Ms. Mindy, Corporate Client
Unknown Cybercrime Syndicate operating overseas

Background
Golden Asset Advisory provides wealth advisory services and manages portfolios for small corporate clients.

In January, Ms. Mindy, one of Golden Asset Advisory’s long-term clients, began asking about cryptocurrency investment opportunities after seeing several online advertisements promising high returns.

At the same time, Mr. Sylvester was receiving inquiries from multiple clients who had also seen similar ads on:

1. Facebook
2. TikTok
3. WhatsApp groups

The ads displayed Golden Asset Advisory’s logo, office photos, and staff profile images, making the promotions look official and credible.

However, the investment programs advertised were not offered by Golden Asset Advisory.

Incident Overview
A cybercrime group had:

1. Copied Golden Asset Advisory’s branding from their website.
2. Created a fake mobile app that appeared to be part of Golden Asset Advisory’s online services.
3. Used social media ads and WhatsApp broadcasts to promote an “Exclusive High-Yield Digital Investment Program.”
4. Required clients to transfer funds to foreign bank accounts under names unrelated to Golden Asset Advisory.

The fake app displayed fake profit growth charts, showing daily returns ranging from 12% to 18%.
Several clients, including Ms. Mindy, invested amounts ranging from USD 15,000 to USD 120,000.

For the first few weeks, the app showed stable “returns”. Some early investors even received small payout withdrawals (a technique to build trust).

After two months:
• The app stopped working.
• Customer support numbers were disconnected.
• Social media pages disappeared.
• All invested funds were gone.

Red Flags (Missed at the Time):
1. Promised returns were unrealistically high.
2. Bank account names did not match Golden Asset Advisory ’s corporate name.
3. Communication handled entirely via WhatsApp.
4. Too much pressure to “invest quickly”.

Impact on Business and Clients:
1. Financial Impact: Clients collectively lost over USD 1.4 million.
2. Reputation Impact: Several clients blamed Golden Asset Advisory, believing it was an official program.
3. Operational Impact: Staff had to manage complaints and file police reports.
4. Emotional Impact: Clients experienced embarrassment and stress, leading to trust erosion

Golden Asset Advisory’s brand reputation suffered even though the company itself was not directly involved.

Discovery
Golden Asset Advisory’s compliance team traced digital evidence and confirmed:

• App server hosting originated from a foreign domain registered under a shell company.
• Social media ads were funded using prepaid debit cards.
• Crypto wallets linked to the scam were laundered across multiple chains, making tracing difficult.

A police report was filed, but due to cross-border jurisdiction issues, no suspects were immediately apprehended.

Root Causes:
1. Lack of digital brand protection (no monitoring of fake websites/apps).
2. Clients lacked awareness of digital investment scams.
3. Social media ads were trusted too easily due to realistic branding.
4. No standardized client advisory warnings regarding unofficial channels.

Preventive Measures Implemented
• Launched Digital Fraud Awareness Campaign for all clients.
• Added “Verify Before You Invest” checks to onboarding materials.
• Set up brand monitoring alerts to detect fake pages/apps.
• Required all investment offerings to be communicated only through official email and client portal.
• Developed a public advisory notice on the company website.

Company: Recycle Manufacturing Company
Industry: Consumer Packaging

Key Individuals:
• Mr. Alvin Joseph, Procurement Executive
• Ms. Tracy Med, Accounts Payable Clerk
• Internal Audit Department

Background
Recycle Manufacturing Company purchases raw materials such as paper rolls and plastic sheets from several suppliers.

The Accounts Payable department relies on invoices submitted by Procurement to process payments.

Recycle Manufacturing Company’s policy requires:
1. Purchase Order (PO) approval before ordering.
2. Goods Received Note (GRN) to confirm inventory arrival.
3. Invoice, matched with PO and GRN before payment.
4. However, the matching process was not always strictly enforced due to workload pressure.

Incident Overview
To supplement his gambling debt, Mr. Alvin, a procurement executive, created fake supplier invoices using a personal laptop and graphic editing software.

He:
1. Copied the logo and formatting from a real supplier invoice.
2. Used a real PO number, but changed the item quantity and price.
3. Submitted the forged invoice to Accounts Payable for approval.
4. Provided his own bank account, disguised with a business-sounding account name.

Because he was considered “familiar and trustworthy,” Ms. Tracy approved the payment without verifying the bank account details or matching with the GRN.

This process was repeated for 7 months, totaling USD 236,000 in fraudulent payments.

Red Flags Missed
1. Invoices are submitted only as PDFs with no paper copy.
2. Frequent urgent payment requests.
3. Bank account name slightly different from supplier name.
4. The procurement officer insisted on handling all communications.
5. No matching Goods Received Note for several invoiced batches.

Discovery
The fraud was uncovered when the supplier called to question outstanding payments that the company believed had already been paid.

A reconciliation review uncovered:
1. Invoice numbers that did not match supplier records.
2. Misspellings and formatting inconsistencies in the fake invoices.
3. A bank transfer record showing payment to an account not registered to the supplier.
4. Internal Audit interviewed Mr. Alvin, who eventually confessed.

Consequences
1. Mr. Alvin was dismissed, charged with forgery and fraud, and sentenced to jail.
2. Ms. Tracy (Accounts Payable Clerk) was issued a warning and retrained on payment controls.
3. Recycle Manufacturing Company suffered financial loss and reputational impact; it improved financial controls.

Root Causes
1. No three-way invoice matching enforcement.
2. Staff trusted an internal colleague without verification.
3. Lack of supplier master record validation.
4. No rotation of duties in procurement and payment processing.

Preventive Measures
1. Enforce PO, GRN, and Invoice matching before payments.
2. Require independent verification of supplier bank details.
3. Use invoice authenticity verification tools (wateUSDark, QR validation).
4. Implement segregation of duties between procurement and payment.
5. Conduct periodic internal audits and fraud awareness training.

Company: Happy Family Mini Mart (a growing convenience store chain)
Industry: Retail

Key Individuals:
Mr. Jeffrey Tommy – Store Owner
Mr. Desmond Teck – Illegal gambling operator
Bank Compliance Unit – Managing Client Compliance

Background
Happy Family Mini Mart operates 12 convenience stores across the city. Business was steady, but financial records showed unusually high cash revenue compared to similar stores in the area.

The bank handling Happy Family Mini Mart’s corporate accounts noticed large and frequent cash deposits, including many just below the USD 10,000 reporting threshold.

Example:
• USD 9,850
• USD 9,920
• USD 9,780

This pattern occurred almost daily.

Incident Overview
Unknown to staff and the bank, Happy Family Mini Mart was being used to launder money proceeds from illegal online gambling operations.

Mr. Desmond, who ran an unlicensed gambling and betting network, needed a way to deposit large amounts of illegal cash into the banking system without raising suspicion.

He approached Mr. Jeffrey and offered a monthly commission of 8% if Happy Family Mini Mart allowed him to mix illegal cash with daily retail revenue.

So the store recorded fake sales entries to justify the sudden increase in daily takings.

Example:
• Real daily sales: USD 2,300
• Reported revenue: USD 11,800
• Difference (USD 9,500) came from illegal gambling cash

This continued for 14 months.

Red Flags Noticed:
1. Cash deposits consistently just below the reporting threshold.
2. The revenue pattern did not match customer volume or location demographics.
3. Several stores showed identical revenue spikes at the same time.
4. The store owner resisted attempts to introduce digital payments.

Discovery:
The Bank’s Compliance Monitoring System detected repeated structured deposits and flagged Happy Family Mini Mart’s accounts for review.

A Suspicious Transaction Report (STR) was filed with the national financial intelligence unit.
Investigators conducted surveillance on the stores and discovered:

1. Customer foot traffic was too low to justify reported revenue.
2. CCTV showed almost no customers during “high sales periods.”
3. Accounting records contained identical repeated receipt numbers, indicating manual overwriting.
4. Mr. Jeffrey eventually admitted the arrangement when confronted with financial evidence.

Consequences:
1. Mr. Jeffrey (Store Owner) was arrested, charged with money laundering, business licenses were revoked.
2. Mr. Desmond (Illegal gambling operator) was arrested and prosecuted for organized crime and money laundering.
3. Happy Family Mini Mart Chain was forced to close; remaining assets frozen and later seized.
4. The Bank Compliance Unit was praised for effective monitoring and reporting.

Root Causes
1. Lack of understanding by business owner on legal risks
2. High-cash business environment with weak documentation controls
3. No independent revenue reconciliation process
4. Insufficient transparency in sales recording systems

Preventive Controls:
1. Mandatory Cash Handling Policy (daily balancing, internal review).
2. Transaction Monitoring for structured deposits.
3. Regular Anti-Money Laundering (AML) Training for small business operators.
4. Encouraging use of digital payments to reduce cash dependency.
5. Stronger Know-Your-Customer (KYC) due diligence by banks for high-cash businesses.

Company: Heavy Load Logistics
Industry: Freight & Supply Chain

Key Individuals:
Mr. Samuel, IT Manager
Ms. Betty, Finance Officer
Unknown Cybercriminal Group

Background
Heavy Load Logistics manages shipments and delivery scheduling across Southeast Asia. Their operations rely heavily on:

1. An internal shipment tracking system.
2. Staff email accounts for communication.
3. Digital invoicing and payment systems.

Most employees work on company laptops, and remote access is allowed by VPN. However, regular cybersecurity training had not been conducted for over a year.

Incident Overview:
One morning, Ms. Betty received an email appearing to be from a known supplier. The email requested her to download and verify an urgent invoice.

The email looked legitimate, including:
1. Supplier’s logo.
2. Professional tone.
3. Matching signature block.

Without checking the sender’s full email address, she downloaded the attached Excel file, which prompted her to “Enable Content.”

When she enabled the macro, malicious ransomware executed silently. Within minutes:
1. Company servers were encrypted.
2. Tracking systems shut down.
3. All shared folders displayed a ransom note.

The ransom note demanded USD 500,000 in cryptocurrency to unlock the systems.

Red Flags Missed:
1. The email sender’s address was slightly misspelled.
2. “Urgent” tone with high pressure to act quickly.
3. Attachment required enabling macros.
4. No verification call was made to confirm the request.

Impact on Business:
1. Incoming and outgoing shipments were delayed for 3 days.
2. Customers could not track delivery statuses.
3. Operating losses were estimated at USD 180,000.
4. A major distribution partner threatened contract termination.

Reputational trust suffered, as customers began questioning data safety.

Discovery & Response:
1. Heavy Load Logistics’ IT team attempted to restore systems from backups. Unfortunately, the backup server was also connected to the network, so it was encrypted as well.

2. The company refused to pay the ransom and contacted a cybersecurity incident response team.

3. Specialists traced the malware variant and successfully restored part of the system from offsite backup tapes. Full recovery took 9 days.

Consequences:
1. Heavy Load Logistics suffers financial loss, operational disruption, and increased insurance premiums.
2. Ms. Betty received a warning and required cybersecurity retraining (not intentional wrongdoing).
3. IT Department required implementing new cybersecurity controls.
4. Cybercriminal Group Never identified; likely part of a global ransomware network.

Root Causes:
1. Lack of employee phishing awareness training.
2. Backup systems are not segmented or protected.
3. No email filtering or malware scanning for attachments.
4. Over-reliance on trust-based communication with vendors.

Preventive Measures:
1. Conduct regular cybersecurity awareness training.
2. Implement multi-factor authentication (MFA) for all access points.
3. Implement email security filters and block risky attachment types.
4. Store backups offline or on an isolated cloud infrastructure.
5. Establish a Cyber Incident Response Plan (CIRP).

Business: Good Taste Bistro (medium-sized family restaurant)
Industry: Food & Beverage

Key Individuals:
Mr. Dickson Peterson is the restaurant’s owner.
Ms. Melissa Mary is the Restaurant Cashier.
Tax Authority Audit Team from the government tax department.

Background
Good Taste Bistro operated in a popular commercial area and was known for its high customer volume. However, compared to other restaurants in the same district, the restaurant’s declared revenue was unusually low and inconsistent.

Despite strong business activity and full seating on weekends, the annual tax filings reflected only marginal profits.

Incident Overview
To reduce the amount of income tax payable, Mr. Dickson instructed his cashier and accountant to:

1. Record only part of the cash sales in the system.
2. Delete or cancel receipts after customers leave.
3. Maintain two sets of accounting records:
a. Official Book: For tax filing (lower revenue).
b. Private Book: Real revenue and expenses.

The undeclared cash was kept aside for personal use and to pay some staff salaries off the books (no contributions to statutory employee funds).

This scheme continued for three years.

Red Flags Noticed:
1. High customer traffic, but low reported revenue.
2. Frequent “voided” or “cancelled” cash transactions.
3. Some staff were paid in cash without payroll records.
4. Suspiciously low inventory usage figures.

A nearby competitor anonymously reported that the restaurant’s sales numbers did not seem realistic given the daily customer flow.

Discovery:
The Tax Authority conducted a surprise audit.

Key findings:
1. POS system logs showed manual deletion of transactions outside normal business adjustments.
2. Bank deposits were significantly lower than what supplier invoices suggested.
3. Inventory consumption analysis revealed that the restaurant was serving far more meals than recorded.
4. A seized notebook from the cashier contained accurate daily sales data that differed from tax records.
5. Confronted with matching financial and inventory evidence, Mr. Dickson admitted to the tax evasion scheme.

Consequences:
1. Mr. Dickson (Owner) was charged with tax evasion, fined, and given a suspended prison sentence.
Good Taste Bistro was required to pay back taxes, penalties, and interest; its business reputation was damaged.
2. Melissa (Cashier) was investigated, later served as a cooperating witness.
3. The accountant was fined for professional misconduct and failure to report irregularities.

Root Causes:
1. The owner intentionally manipulated revenue to reduce taxes.
2. Weak internal oversight and no separation of duties.
3. High reliance on cash transactions.
4. Lack of regular financial audits.

Preventive Controls:
1. Implement POS audit logs with restricted access.
2. Require independent monthly revenue and inventory reconciliation.
3. Encourage digital payments to reduce the risk of unrecorded cash sales.
4. Conduct annual external audits.
5. Provide tax compliance training for business owners and staff.

Company Background:
Gold Coin Bank is a mid-sized commercial bank that offers small business loans to local SMEs.
Loan applications are processed through the SME Lending Department.

Key Staff:
1. Kenny Thomas is the Senior Loan Officer with the role of reviewing documents & recommending loan approvals.

2. Samuel Kenny is the Branch Manager that has the authority to approve loans up to USD500,000.

3. Jeff Anthony is the owner of a construction subcontracting company.

The Setup:
Jeff runs Super Solid Engineering, a subcontractor company.

The business is facing cash flow pressure due to delayed payments from clients.

He applies for a USD320,000 business loan to “purchase new equipment.”

Kenny requests supporting documents:
1. Three years of financial statements
2. Bank statements
3. Supplier quotation
4. Tax filings

Everything looks reasonable, but something feels “too polished”.

The Manipulation:
1. Jeff isn’t actually doing well.
2. His company is nearly insolvent.
3. To increase his chance of loan approval, he hires an external “document consultant”

Who:
1. Inflates revenue figures in the financial statements.
2. Edits bank statements to show higher balances.
3. Creates a fake supplier quotation for construction machinery.

The documents look professional, with real company logos and improved formatting.

Kenny performs a routine review and sees:
1. Annual Revenue of USD 1.2 million (real figure) and USD 3.8 million (fake figure).
2. Nett Profit of -USD180,000 (real figure) and +USD240,000 (fake figure).
3. Bank Account Balance of USD9,400 average (real figure) and USD248,000 average (fake figure).

But since this is a repeat client who previously took small loans and repaid on time, Kenny trusts the paperwork.

He recommends approval.

Samuel, the Branch Manager, signs off without independent verification.

The loan is approved and disbursed.

The Discovery:
Three months later, Gold Coin Bank receives late payment notices from Jeff.

During a risk review, the bank’s Internal Audit department cross-checks Super Solid Engineering’s tax filings directly with the tax authority.

The Findings:
1. Reported revenue is much lower than in the documents submitted.
2. The supplier quotation is linked to a shell company registered three months earlier.
3. The bank statements submitted were digitally manipulated.
4. A full investigation begins.

What Went Wrong:
1. Documents not verified with third parties.
2. Overreliance on past good relationships.
3. Manager approved without independent review.
4. Financial distress of the client was not assessed.

Consequences:
1. Jeff is charged with fraud and forgery.
2. The bank recovers only USD27,000 from asset seizure.
3. Gold Coin Bank faces reputational damage and scrutiny from regulators.
4. Kenny receives a formal warning; Samuel’s approval authority is reduced.

Prevention Measures:
1. Independent Verification (Third-Party Checks).
2. Bank Statement Source Validation.
3. Dual Approval for High-Risk Clients.
4. Financial Trend Analysis.
5. Vendor & Supplier Verification.

Company Background:
Fast Build Property Inc. is a company that manages building maintenance and renovation works for condominium estates.

They purchase materials such as paints, tiles, electrical fittings, and renovation services through the Procurement Department.

Key Staff:
1. Alice Sim is the Procurement Manager who selects and approves suppliers.
2. Simon Vika is the Project Supervisor who confirms the quantity of materials needed for each project site.
3. Anthony Goh is the Finance Executive who processes suppliers’ payments.
4. Shining Star Supplies is the vendor that provides construction materials.

The Situation:
Over the past year, Fast Build Property Inc. noticed that project costs were steadily rising, especially for:

1. Paint and coating materials.
2. Tile adhesives.
3. Plastering supplies.

Despite rising costs, there were no major increases in project volume.

Nothing obvious was wrong at first glance. All supplier invoices matched approved purchase orders.

The Fraud Mechanism:
Alice, the Procurement Manager, had the authority to:

1. Select suppliers.
2. Approve purchase orders.
3. Sign off on receiving forms.

She developed a private arrangement with Shining Star Supplies:
Shining Star Supplies inflated their invoices by 20% and Alice received monthly “rebates” via cash and shopping vouchers.

To hide the fraud:
1. Simon (Project Supervisor) overstated material quantity needs in internal request forms.
2. Alice approved the inflated orders.
3. Anthony (Finance) processed payments because the invoices matched the purchase orders on file.

This continued for 18 months.
Total Excess Payments of approximately USD360,000

How the Fraud Was Uncovered:

A new CFO, recently hired, noticed that material usage for similar-sized projects varied unusually between different sites.

He analyzed four projects, comparing the project sizes, material costs, expected costs, and the variances.

1. The pattern was consistent.
2. He then cross-checked supplier pricing with other suppliers in the same industry.
3. Shining Star Supplies’ prices were 15% to 25% higher than the market average.
4. A surprise warehouse audit confirmed that the actual quantity of materials delivered was less than recorded.

Key Red Flags That Were Missed:
1. Same staff controlled selection + approval + verification.
2. Supplier prices never went to a competitive tender.
3. Repeated use of the same supplier.
4. Material usage is inconsistent across similar projects.
5. No surprise warehouse/audit checks.

Consequences:
1. Alice admitted receiving illegal kickbacks.
2. Simon was found complicit and dismissed.
3. Shining Star Supplies lost its contract and was investigated.
4. Fast Build Property Inc. managed to recover only 25% of the losses.
5. The company’s Board ordered a full procurement process redesign.

Prevention Measures:
1. Separation of Duties.
2. Competitive Tendering.
3. Price Benchmarking.
4. Warehouse Receipt Verification.
5. Supplier Rotation & Review.
6. Conflict of Interest Declarations.

Company Background:
Golden Age Community Foundation is a non-profit organization that runs environmental education programs.

It receives donations from corporate sponsors, government grants, and fundraisers.

Key Staff:
1. Susan Miler is the Finance & Accounts Clerk, handling bookkeeping and managing petty cash.
2. Franky Tim is the Finance Manager who approves invoices and signs cheques.
3. The Board of Trustees is the governing oversight body that reviews quarterly financial reports.

The Situation:
Susan had worked at Golden Age Community Foundation for 7 years.

She was seen as:
Reliable
Quiet
“Good with numbers”

Because the organization was small, Susan handled multiple roles:
1. Recording incoming donations
2. Preparing payment vouchers
3. Maintaining petty cash
4. Reconciling bank accounts

There was no requirement for review by another person.

The Fraud Scheme:
1. When Susan’s husband lost his job, the household struggled.
2. She began taking small amounts from petty cash amount of USD40 here, and USD75 there.
3. She recorded these withdrawals as “Program Supplies”.
4. When nobody noticed, she escalated.

She created fake invoices using a free online template maker and listed a non-existent vendor:
“Zome Hardware”

She submitted invoices for items like:
1. Gardening gloves
2. Seedling trays
3. Signboards
4. Cleaning tools

The amounts were small at first: USD300 – USD800 per invoice.

Franky, the Finance Manager, approved them without question because:
1. The programs really did use such supplies.
2. Susan handled all documentation neatly and consistently.
3. Once she felt confident, Susan increased the amounts to USD3,000 – USD6,500 per month.

This continued for 28 months.
Total funds embezzled: USD134,000

How the Fraud Was Discovered:
A new Board Treasurer joined and requested:

1. Vendor verification.
2. Bank reconciliation support documents.
3. Petty cash usage reports for the previous 12 months.

During review, she noticed:
1. The same “vendor” always submitted straightforward, typed invoices but never delivered packing slips.

2. Payments to Zome Hardware were made via cheque pick-up instead of bank transfer.

3. The vendor had no website, company registration record, or contact number.

4. The Board Treasurer requested a surprise petty cash count.

5. There was USD127 missing from the cash box.

When questioned, Susan confessed.

Key Internal Control Failures:
1. Single person responsible for multiple finance roles.
2. No vendor verification process.
3. Manager approvals were routine and unchallenged.
4. Petty cash is not reconciled or audited regularly.
5. No rotation of duties or mandatory leave.

Impact:
1. Allowed concealment of fraudulent entries.
2. A fake supplier could be created easily.
3. Lack of skepticism enabled persistence.

Consequences:
1. Susan was charged with criminal breach of trust.
2. The organization recovered less than 20% of the funds.
3. Donor confidence was damaged.
4. The Board implemented immediate financial control reforms.

Prevention Measures:
1. Segregation of Duties – Separate record-keeping, authorization, and custody of cash.
2. Vendor Registration Checks – Verify company registration & contact details.
3. Regular Surprise Audits – Deter ongoing misuse.
4. Dual Signatures for Payments – Require a second signer above to set the thresholds.
5. Mandatory Job Rotation & Leave – Fraud becomes harder to hide.

Company Background
Wonder Foods Inc. is a mid-sized food distribution company in New Jersey, USA.

They supply restaurants and supermarkets.

The company has a small finance department:
Dicky Simon is the Finance Manager who approves payments.
Zam Surish Surish is the Accounts Executive who prepares invoices & payment vouchers.
Peter Dezosa is the Procurement Officer who selects suppliers & gets quotations.
Jenny Teo is the Overseas Finance Manager who reviews monthly reports (high-level only).

What Happened:
Business was expanding, and the finance team was under pressure to process payments quickly.

Peter Dezosa (Procurement Officer) suggested using a new packaging supplier called “Easy Pack Solutions”. The price looked normal and competitive, so no one questioned it.

Every month, Zam Surish (Accounts Executive) received invoices from Easy Pack Solutions for packaging supplies worth between USD18,000 to USD25,000 each time.

The invoices appeared legitimate:
1. They looked professional.
2. They had item descriptions.
3. They matched procurement orders submitted by Peter Dezosa.
4. So Zam Surish prepared the payment vouchers.
5. Dicky Simon (Finance Manager) approved them.
6. Payments were made via bank transfer.

This continued for 14 months.
Total Paid: USD276,000

The Discovery:
One day, Jenny Teo performed a spending review to reduce costs.

She noticed something odd:
No warehouse records show the delivery of any packaging materials from Easy Pack Solutions.

To verify, he checked:

The Discovery:
One day, Jenny Teo performed a spending review to reduce costs.

She noticed something odd:
No warehouse records showed receiving any packaging materials from Easy Pack Solutions.

To verify, he checked:
1. Deliver Orders, but none were found.
2. Goods Received Notes, but none were found.
3. Contact Information, but the phone line disconnected.
4. Check Website, found to be very basic with no real address.
5. The Business Registry Records were registered by Peter Dezosa’s cousin.

The supplier was fake.
The company had been paying invoices for goods that never existed.

How the Fraud Worked:
Peter Dezosa and his cousin created a shell company (Easy Pack Solutions).

Peter Dezosa:
1. Created fake quotations.
2. Submitted fake Purchase Orders.
3. Confirmed “deliveries” verbally.

Zam Surish:
1. Trusted internal documents.
2. Did not verify actual goods received.

Dicky Simon:
1. Approved payments based on paperwork
2. Did not check warehouse confirmations.

Red Flags That Were Missed:
1. No delivery records.
2. Same person handling supplier selection & receiving confirmation (Peter Dezosa).
3. The supplier had no proven track record.
4. Finance approvals were based only on paperwork.
5. Payments were routine and went unquestioned.

Consequences:
1. Peter Dezosa admitted involvement and resigned.
2. The company recovered only USD42,000 after legal proceedings.
3. The fraud damaged trust and required a process overhaul.

Prevention Measures:
1. Vendor Due Diligence Checklist.
2. Separation of Duties.
3. Three-Way Matching.
4. Random Warehouse Audit.
5. Supplier Spend Report Monitoring.

Company Background
Bill owns BILLY Website Design Ltd, a company headquartered in Canada with subsidiaries in India, China, and Singapore. He travels to each subsidiary quarterly to conduct staff meetings and team-building activities.

Shortly before a scheduled trip to Singapore, Bill received a call from Jackson, an existing e-commerce website design and maintenance client. Jackson informed Bill that a Singapore-based website design company had emailed him an offer with rates 30% lower than his current contract with BILLY Website Design Ltd.

Bill did not take this information seriously, as competitors frequently attempted to undercut his pricing. He assumed that Jackson was seeking a discount based on a competitor’s quotation.

However, Jackson felt dissatisfied with Bill’s response and decided to request a formal quotation from the Singapore company. He was shocked when he received it—the quotation was identical to the one Bill had issued two years earlier.

Disturbed by this discovery, Jackson forwarded the quotation to Bill and asked:

“Do you have another company named BUDGET Website Design Private Limited?”

Investigation
During his visit to Singapore, Bill was occupied with meetings and presentations. He also announced the annual salary increments and bonus scheme to the staff.

On the final day of his trip, while clearing his email backlog before travelling to the next subsidiary, Bill read Jackson’s email and was alarmed by its contents.

Bill decided to extend his stay in Singapore without informing his team and initiated a covert investigation with the assistance of local fraud investigators.

Over the weekend, investigators—led by Bill—returned to the office to install hidden CCTV cameras, while digital forensics specialists created forensic images of all computer storage media.

Laboratory analysis of the forensic images revealed an identical quotation file on five desktop computers belonging to:

The Sales Director
The Sales Executive
Two Website Designers
The Marketing Director

Further evidence emerged from CCTV footage showing the Sales Director and an unidentified woman entering the office at midnight, accessing the Sales Director’s computer, and connecting an external USB hard drive.

Interviews and Findings
Bill convened an urgent company meeting, surprising the team with his sudden return. Investigators conducted separate interviews with the Sales Director and Marketing Director.

Both directors argued that their employment contracts did not prohibit family members from operating a similar business. They subsequently submitted their resignation letters and left the company.

The investigators also interviewed the two Website Designers, who admitted that they had been assisting the directors part-time and agreed to act as witnesses.

Legal Action
Bill engaged local solicitors to assess the legal implications. The investigation team, comprising fraud investigators, digital forensics examiners, and litigation lawyers, is to prepare for the legal action.

The lawyers applied for a Search and Seizure Order, targeting both the former directors’ residences and the offices of BUDGET Website Design Private Limited.

Within two days, the court approved the application. Concurrently, Bill lodged a police report against the two former directors.

Two investigation teams simultaneously executed the court orders at both locations to prevent the destruction of evidence. Digital forensics examiners seized computers and storage devices.

Further forensic analysis revealed that the former directors had been stealing BILLY Website Design Ltd’s customer database, website design templates, and operational data for over four years.

The investigation estimated that approximately 9% of Bill’s business revenue had been diverted to BUDGET Website Design Private Limited. A Certified Public Accountant calculated total financial losses of approximately USD 300,000 over four years.

The Verdict
After negotiations, both former directors agreed to return USD 250,000 to Bill in exchange for him not pursuing civil litigation. The Commercial Crime Unit subsequently took over the case to continue criminal investigations.

Lessons Learned
This case highlights several gaps in business operations and governance. Organisations operating similar business models should consider the following measures to reduce future risks:

(1) Install visible CCTV cameras at remote subsidiaries to deter internal fraud and external intrusions.

(2) Implement biometric access control systems to track employee entry and exit. These records can support KPIs or serve as evidence during investigations.

(3) Maintain strong customer relationships through regular communication to obtain early warning signs and valuable feedback.

(4) Engage local employment lawyers to review contracts for compliance with local laws. Ensure that Non-Disclosure Agreements (NDAs) and Non-Competition Clauses (NCCs) adequately protect the business.

(5) Regularly review business practices, policies, and procedures to address operational weaknesses.

(6) Consider Fidelity Guarantee Insurance, which indemnifies employers against losses caused by employee theft, dishonesty, or fraud. Consult your insurer to confirm availability in your jurisdiction.

By Risk Guard Training Academy

Company Background
Cindy had been employed as a Procurement Manager for the company for over 15 years. Her primary responsibility was to source cost-effective construction materials for projects awarded to the company, while ensuring compliance with approved specifications.

During one construction project, a structural collapse occurred, resulting in injuries to two workers. Following the incident, a team of investigators was appointed to determine the cause of the accident.

Initial findings revealed that the materials used in the structure did not comply with the approved project specifications. The business owner suspected that Cindy may have knowingly procured substandard materials and therefore requested an internal investigation.

The Investigation
The investigators mapped the entire project cycle and identified all staff involved, along with their respective roles. These included:

• Project managers
• Procurement personnel
• Storekeepers
• Transportation staff
• Site supervisors
• Workers
• Subcontractors

Relevant documents were collected, including:

• Purchase orders
• Supplier invoices
• Delivery orders

Interviews were conducted with the procurement manager (Cindy) and the approved supplier. Both parties confirmed that the materials supplied and delivered fully complied with the approved specifications.

Site Investigation and Findings
The investigators then visited the accident site and interviewed workers. During these interviews, they learned that the site was monitored by multiple CCTV cameras.

Permission was obtained from the security office to review the CCTV footage. During the review, investigators observed that a site supervisor was present at the site during nighttime hours, overseeing the unloading of materials.

The supervisor was interviewed again. His statements did not align with the CCTV footage. When the investigators reviewed the video evidence with him, the supervisor admitted that:

• An unapproved supplier had approached him
• The supplier offered USD 1,000 as an inducement
• He agreed to exchange approved materials with lower-quality materials
• The exchange was carried out at night to avoid detection

Outcome
The supervisor’s actions directly resulted in the use of substandard construction materials, leading to the structural failure and injuries to two workers.

A police report was lodged by the business owner.

Following the investigation, it was concluded that Cindy was not involved and was innocent of any wrongdoing.

• Bribery can occur outside procurement, even when procurement controls are strong.
• Site supervision and after-delivery controls are critical.
• CCTV and document verification are powerful investigative tools.
• Segregation of duties alone is insufficient without monitoring and audits.
• Small inducements can lead to serious safety, legal, and reputational consequences.

Risk Guard Training Academy

Company Background
John and Peter had been close friends since childhood. A few years ago, they jointly established a partnership company providing website design services. The business experienced rapid growth during its first two years and expanded to 18 employees.

Both partners managed separate project teams. However, the company’s performance began to decline significantly when several programmers resigned within a short period.

John subsequently heard rumors that Peter had formed another partnership business and that the resigned staff had joined this new company. Concerned about a potential conflict of interest, John engaged an external investigator to conduct a discreet investigation without alerting Peter.

The Investigation
The investigator commenced with background checks and conducted five days of surveillance on Peter. Evidence gathered showed that Peter frequently visited another office after working hours, where he typically stayed for approximately two hours each visit.

Upon reviewing the surveillance footage, John recognized several individuals entering the office as former employees of his website design company.

Financial and Data Misuse Indicators
Further investigation revealed that Peter had been claiming transportation and entertainment expenses from the company, which he described as costs incurred while meeting “potential clients.”

John became increasingly suspicious that:

• These claims were not legitimate business expenses, and
• Peter may have misappropriated confidential company data for use in his newly established business.

John’s lawyer applied for and obtained a search and seizure warrant from the court. Searches were conducted at Peter’s residential and office premises.

During the operation:

• Five hard drives and four USB thumb drives were seized.
• The devices contained confidential company data.
• The evidence was secured and presented to the court.

Outcome
John subsequently engaged a litigation lawyer to pursue legal action against Peter for conflict of interest, breach of fiduciary duty, and misuse of company resources and confidential information.

Key Risk & Compliance Lessons

• Conflicts of interest can arise even between founders and trusted partners.
• Side businesses competing with an employer or partnership must be declared and approved.
• Expense claims can be a red flag for undisclosed activities.
• Confidential data is a critical asset requiring strong access controls.
• Early detection and discreet investigations can prevent further losses.
• Legal remedies may include search and seizure, civil claims, and injunctions.
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