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Fraud Advisory Panel Ninth Annual Review 2006-2007 Ethical is bestthe defencebehaviour againstfraud It’s all about choices LOW RES PROOF ONLY Ethical behaviour is rooted in individual choices but that’s not the whole story. Government, business and media supply inspirations and incentives that help set the tone of our society. Some of these are making an inadvertent but powerful contribution to the growth of fraud. LOW RES PROOF ONLY Contents The Fraud Advisory Panel is an independent body 2 Chairman’s Overview: with members from both the public and private The Best Defence sectors. Its role is to raise awareness of the immense human, social and economic damage caused by fraud 3 About The Panel and to develop effective remedies. 3 Programme 3 Joining The Panel works to: 3 Corporate Members 4 Trustees • originate proposals to reform the law and public policy, with a particular focus on fraud 6 Public Policy: investigations and prosecutions. “A Once in a Generation Chance” • Advise business and the public on prevention, 6 At least £20 Billion a Year 6 Aspirations and Realities detection and reporting. 7 Six Cheap and Simple Steps • Assist in improving education and training in business and the professions. 8 Ethics and Fraud • Establish a more accurate picture of the extent, 9 The Social Context causes and nature of fraud. 9 Inspirations and Incentives 9 A Zone of Tolerance The Panel has a truly multi-disciplinary perspective. 10 Marginalising Ethical Criteria No other organisation has such a range and depth 10 Getting Away With It of knowledge, both of the problem and of ways to 11 The Business Context combat it. 11 The Role of Corporate Culture 12 Creating an Impression The Panel was established in 1998 through a public 13 A Case Study spirited initiative by the Institute of Chartered 14 Lessons for the Rising Generation Accountants in England and Wales. It is now a 16 Strengthening the Ethical Framework registered charity and company limited by guarantee, 16 Some Building Blocks funded by subscription, donation and sponsorship. 18 Ethics in Organisations 20 Common Sense v Red Tape LOW RES PROOF ONLY Chairman’s Overview The Best Defence The Panel has dedicated its 2007 annual More law and regulation is not the answer. My fellow Trustees and I are grateful to review to the theme of promoting ethical Setting high standards of behaviour, not them all, and for the support of our Senior behaviour. We feel that high standards in least towards customers and employees, Executive Mia Campbell and her colleague personal, as well as organisational, life are should be a priority for every governing Tamaryn Thorburn; Martin Robinson the best defence against fraud and that a body, from the smallest enterprise to the our consultant on Education, Events climate of corner-cutting and indifference largest conglomerate. In this way, boards of and Training; and Simon Pearce, who to others allows it to grow. directors will give a clear signal that prepared this Review. A particular word of not only is good behaviour expected but thanks goes to the Institute of Chartered Experience tells us that too many bad that it will be rewarded and low standards, Accountants in England and Wales (which examples are being set and excused in let alone downright dishonesty, will not helped found the Panel and has remained its business and the public sector, sometimes be tolerated. strongest supporter) and the Association of at the very top. When lip service is paid to Certified Fraud Examiners. ethical behaviour without attempts to instil Of course very many people in business and an ethical culture, organisations become public bodies care deeply about standards. more and more vulnerable to fraud from The Fraud Advisory Panel exists only within (already the source of the great through the support of individuals and majority of financial crime hitting the organisations who see fraud as a human Rosalind Wright CB QC corporate sector). and social issue as well as a financial one. October 2007 LOW RES PROOF ONLY About The Panel The Panel is governed by a Board of • A special conference focused on fraud and • Networking and opportunities to Trustees and chaired by Ros Wright, misconduct in research. Speakers included exchange information with experts from a former Director of the Serious Fraud experts from the scientific, biomedical, the public sector, policing, accountancy, Office (see biographies on pages 4-5). academic and regulatory fields in Britain the law, business, financial institutions, and America, as well as the scientific press. IT, security and academia. Programme Further information on the Panel’s activities • Preferential rates and early notification 2006-2007 has been the Fraud Advisory is available at www.fraudadvisorypanel.org. of all conferences and seminars (some Panel’s most productive year to date. events are free to members). Highlights included: Joining • Access to the members’ website with • playing a leading role in debate on the People and organisations join the Panel reports of internal meetings and an Fraud Review by setting out detailed because they care about fraud, want to online searchable database. proposals on the law, policing, the courts do something about it, and exchange and the machinery of government. intelligence, information and insights Corporate membership includes up to 20 in the process. named employees entitled to all the above • Making expert responses to government benefits. The Panel also offers a free one- consultations on judicial powers and As of October 2007 there were 175 hour training session on a fraud-related action against organised and financial individual and 47 corporate members (see subject of your choice. Corporate members crime, as well as submitting evidence to the below) plus 26 observer organisations, are listed on the Panel’s website and in its House of Common’s Home Affairs Select mostly public sector bodies. All members are annual review. Individual membership costs Committee enquiry into police funding. required to conform to a Code of Conduct. £53 a year; corporate membership costs £1,060. For more information contact the • Highlighting new issues such as the legal Benefits of membership include: Panel on 020 7920 8721 or membership@ loopholes exposing web-based virtual fraudadvisorypanel.org. communities to fraud. • influencing public policy via the Panel’s research and proposals. • Staging more events, with bigger audiences, and on a wider range of issues, • Participation in multi-disciplinary working than ever before. These included regional groups (Investigation, Prosecution and workshops on the role of the accountant Law Reform, Cybercrime and Education, in fraud risk management; seminars on Events and Training) and ad hoc groups consumer bankruptcy, corporate identity on topical issues. fraud, tax, cybercrime and retail fraud. Corporate Members 192.com Business Services, Accountants’ Joint Disciplinary Scheme, Alix Partners Ltd, Association of British Insurers, Association of Certified Fraud Examiners, Association of Certified Fraud Examiners (UK Chapter), Association of Chartered Certified Accountants, AVIVA plc, Baker Tilly, BDO Stoy Hayward LLP, Bishop International Ltd, BSKYB Ltd, Cadbury Schweppes plc, Calyon, Capcon plc, Chantrey Vellacott DFK LLP, CIFAS - the UK’s Fraud Prevention Service, Control Risks Group, Daylight Forensic & Advisory, Deloitte & Touche LLP, Denton Wilde Sapte, Ernst & Young, Experian Decision Analytics, Finance & Leasing Association, Financial Services Authority, Grant Thornton UK LLP, HBOS plc, Institute of Chartered Accountants in England & Wales, Institute of Chartered Accountants of Scotland, KPMG LLP, Law Society of Scotland, Legal & General Group plc, Lloyds TSB Bank plc, McGrigors LLP, Merrill Lynch Europe plc, MHA Consulting, National Audit Office, NHS Counter Fraud & Security Management Service, OVAG Limited, PKF (UK) LLP, PricewaterhouseCoopers LLP, Protiviti Ltd, Prudential plc, Royal & SunAlliance plc, RSM Bentley Jennison, Solicitors Regulation Authority, UBS AG LOW RES PROOF ONLY Trustees Ros Wright CB QC Steven Philippsohn Felicity Banks Chairman of the Panel since May 2003. Deputy Chairman of the Panel and Head of Business Law at the Institute of Chairman, Supervisory Committee, OLAF Chairman, Cybercrime Working Group; Chartered Accountants in England and (the European Union’s Anti-fraud Office); founder and Senior Partner, PCB Litigation Wales; represents the Institute on economic independent member, DBERR (formerly LLP, conducting fraud and asset recovery crime issues; represents the accounting DTI) Legal Services Group and Insolvency civil litigation; Co-Editor of the UK profession on HM Treasury’s Money Service Steering Board; Vice-Chairman, Manual of the Association of Certified Laundering Advisory Committee. Jewish Association for Business Ethics; Fraud Examiners; member, editorial Bencher of the Middle Temple; Director, boards of E-Commerce Law & Policy and Bill Cleghorn Serious Fraud Office 1997-2003; General Inside Fraud Bulletin; UK representative Counsel and Executive Director, Investor member of the Fraud Network of the Protection, Policy & Legal Division at the International Chambers of Commerce; Securities and Futures Authority 1987- member, Home Office panel on the future 1997; Non-executive Director, OFT of internet crime. 2003-2007; Head of the DPP’s Fraud Investigation Group for the City and Metropolitan Police areas 1983-1987; Partner, Financial Crime Investigations, recipient of the Association of Certified Forensic