Security Update – 4 June 2009

The Defence Minister, Joel Fitzgibbon, resigned on 4 June amid increasing concerns regarding the misuse of his position. Fitzgibbon’s ministerial position had become untenable following recent allegations relating to his brother’s insurance company, NIB Health.

Security Update – 28 May 2009

The Sydney ferries boss, Rear Admiral Geoff Smith, was sacked for misconduct on 27 May in relation to credit card fraud. Mr. Smith had been stood aside in March after the Independent Commission Against Corruption (ICAC) began investigating the mis-use of his government-issued credit card.

Security Update – 26 May 2009

A trial began on 25 May in Paris in which the French headquarters of the Church of Scientology (the ‘Celebrity Centre’) and the church’s bookshop are being sued for fraud. Leading French members of the church are also facing charges of illegally distributing pharmaceuticals, after complaints from new adherents that they were made to pay thousands of euros for books, courses, ‘purification packages’ and electronic measurement to gauge spiritual progress.

Security Briefing – 23 April 2009

Organisations should be vigilant of the heightened risk of employee fraud due to increasing pressures during the global financial crisis. Deloitte Forensic has estimated that the total cost of fraud to the Australian economy could be as much as $10 billion a year, with a significant degree of detected workplace fraud remaining unreported. According to a current Ernst & Young global fraud survey, 85 percent of fraud is committed by employees.

Three elements are necessary for an individual to turn to fraud – opportunity, incentive/pressure (motivation) and rationalisation (as hypothesised by Donald Cressey). During difficult economic times all three elements increase dramatically. Mass redundancies and cost-saving measures (such as security budget cuts) open up opportunities for fraud and industrial espionage as gaps appear in control systems. The incentive for an employee to commit fraud and espionage also rises as personal finances become tighter, making cash offers for confidential information more tempting. As others lose jobs, employees feel under increasing pressure to commit fraud to aid their own financial or job security prospects. The rationalisation to commit fraud or industrial espionage also increases as more employees become disgruntled and morale dips due to lower-than-expected pay and bonuses. In such situations, workers can persuade themselves that they have received less than they deserve, so are entitled to extra money gained through fraudulent activities.

Security Briefing – 6th April 2009

Internet fraud reached record highs in 2008, with complaints 33 percent higher than in 2007, according to a report in the United States. The Internet Crime Complaint Center (IC3), a partnership between the Federal Bureau of Investigation (FBI) and the National White Collar Crime Center (NWC3), stated that the total reported loss linked to online fraud in 2008 stood at $US265 million ($369 million). The report identified the non-delivery of merchandise and/or payment as the most reported internet fraud complaint.

Internet fraud likely to be far higher than reported levels

John Kane, research manager at NWC3, warned that 2009 internet fraud complaints were at a higher level than ever before, with a 50 percent rise in March alone. Social networking sites and instant messenger services were identified as increasingly popular locations for scams. Mr. Kane estimated that only about 15 percent of cyber-fraud cases are reported to crime control agencies, meaning that the IC3 report only shows the tip of the iceberg in regard to the scale of online fraud. FBI Cyber Division Assistant Director Shawn Henry warned that online fraud schemes would continue to flourish as more financial data migrates to the internet.

Security Briefing – 3 April 2009

Victoria’s major hospitals will undergo audits as the scandal over the manipulation of waiting lists continues to escalate. Health Minister Daniel Andrews has also announced that a ‘Director of Data Integrity’ will be created within the Department of Human Services. The move comes in response to mounting pressure regarding the lack of effective quality control regimes involved in hospital data validation.

Audit calls for extra data checks to be enforced

An independent audit has found that ‘phantom wards’ were created and waiting lists were manipulated at four Victorian hospitals (Royal Melbourne, Royal Children’s, Dendenong and Latrobe Regional). Meanwhile, the Royal Women’s Hospital had been manipulating waiting lists for almost a decade. Senior health sources and the Australian Medical Association stated in February that hospital data are subject to manipulation.

The report by Victoria’s Attorney-General, Des Pearson, found that nurses were retrospectively amending patient data records to assist hospitals in meeting government targets. Mr. Pearson’s audit, which stated that fraud is likely to be more widespread than the current findings, advised that new data checks be enforced as part of sweeping changes in the hospital funding system. The manipulation of hospital data calls into question the accuracy of Government health system performance reports.

International Operations Group - Analysis