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.

The ICAC investigations began after a whistleblower raised the allegations of card fraud with the Department of Premier and Cabinet. It has been reported that Mr. Smith improperly spent $95,000 on school fees, foreign travel and gifts. Mr. Smith had previously been cleared of any wrongdoing by ICAC in March 2007 after members of his family were employed for summer jobs manning the ferry wharves. Including Mr. Smith, there have been 12 ferry chiefs in the last 15 years. The incident provides a further example of mismanagement of Sydney ferries and will add to support for the ferries to be privatised.

International Operations Group – Recommendations

The current global financial crisis is causing increasing levels of fraud to be discovered as organisations look more closely at their operations. Employee fraud continues to be a major problem with too few organisations enforcing comprehensive fraud monitoring and detection programs. With fraud levels rising due to heightened workplace and financial pressures, it is more important than ever that organisations have secure and robust internal controls and risk management systems.  Businesses and government departments are advised to expand their teams working on fraud prevention and detection to prevent excess losses and be in a strong position for the economic recovery.

Steps in the establishment of a comprehensive anti-fraud program include reviewing current internal security procedures, conducting risk assessments, implementing fraud monitoring, detection and control procedures, and promoting an anti-fraud stance.  A reliable whistle-blowing system should be implemented in all business areas to allow the anonymous reporting of suspected employee fraud. Anonymous whistle-blowing systems are one of the most effective tools in detecting, preventing and deterring workplace fraud. It is estimated that over half of internal frauds are first detected by a colleague. Once a fraud system has been installed, it is vital that it is regularly reviewed and maintained to ensure that it remains effective.

International Operations Group – Services

International Operations Group provides intelligence and security support for corporate and individual clients across the globe. Our team includes experienced specialists in fraud detection, fraud recovery and fraud risk management. Please email intel@interopsgroup.com for further information.

For more information on our fee-based intelligence updates or bespoke reporting, please email Rob Stevenson - rob@interopsgroup.com. Rob can also be telephoned on +61 [0] 420 244 909.