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GRC Professional : GRC Autumn 2012
WHAT WENT WRONG? 10 GRC Professional • Autumn 2012 The high cost of undetected fraud The massive fraud of $45 million by a senior ING accountant exposes the vulnerabilities of fraud detection processes. By Ben Power EarliEr this yEar, 42-yEar-old rajina subramanium was sentenced to a minimum of seven years’ jail for the theft over five years of $45 million from her employer, inG, where she was a trusted senior accountant. the massive fraud, the biggest ever by an australian woman, cost the company $30 million. Most of the money was frittered away on an extravagant lifestyle that included $18 million of lavish overpriced property, millions of dollars’ worth of jewellery, champagne and even Michael jack son memorabilia . the sentencing of subramanium comes as fraud spiked again at the end of last year. A warning to companies in the wake of the massive inG fraud, and amid an increasingly high-risk environment due to economic uncertainty, fraud experts are now warning companies to get on the front foot to raise staff awareness and be proactive in implementing fraud-control systems. While subramanium’s fraud was massive, it was fairly simple: she made 200 transfers of inG’s money directly to shops and real estate agents, or she would shift funds to accounts under her maiden name. the fraud was only discovered after jeweller Paspaley Pearls contacted inG to confir m authorisation of a $2.5 million payment. inG would not comment directly on the circumstances of the fraud. “this was an exceptional circumstance of fraud, involving a trusted long-standing employee with no criminal record,” an inG spokeswomen said in a statement to GrC Professional. “at no time were customer funds ever affected by this matter, or were they ever at risk. the money that was taken was from a holding company, which only exists for inG’s cor porate pu r poses.” inG would also not comment on its response to the discover y of the fraud. “ inG acted immediately to investigate and address the situation upon receiving the details of the fraud,” a spokeswomen said, adding that inG “is satisfied with its current secur it y measures.” Raising the stakes the fraud is the latest in a string of significant thefts involving senior people in the public and private sector. in december last year, Queensland health discovered an alleged $16 million f raud by an employee. in 2010, an accountant at electronics retailer Clive Peeters wa s sentenc ed to eight yea rs for stealing $19 million from the company. Gary Gill, head of Forensic at KPMG, said frauds had spiked in the last six months of 2011, As the fraudster gets more and more confident you find individual transactions tend to get bigger and bigger.
GRC Summer 2012
GRC Winter 2012