Escobañez, Genaro D.

Title:

Dummy customers, fake gold: How employee cheated bank worth Rs 3.77 crore

Case Synopsis:

An ld man working as a gold valuer at a public sector bank here has been arrested for
allegedly duping it of Rs 3.77 crore on the pretext of inspecting the precious metal received
from customers, a police official said on Sunday. The accused, Ramaswamy Nadar, a resident of
Antop Hill area here, was working in the gold loan department of the Indian Bank's Dharavi
branch for past two years, besides running his own jewellery shop. When the bank recently
decided to liquidate some of its assets and opened lockers holding gold items in 77 packets,
they found the yellow metal to be fake. The bank then immediately lodged a complaint with
Dharavi police station.

During investigation, Nadar denies his involvement at first but then confessed that he
had purchased fake jewellery from Dadar and set up 12 dummy customers to cheat the bank.
He was subsequently arrested on Wednesday, the senior police inspector Suresh Patil narrated.
Nadar's job was to issue value certificates to those opting for gold loan. He used documents like
PAN and Aadhaar cards to show 12 of his accomplices as customers. These customers then
deposited fake gold at the bank and Nadar fraudulently gave them value certificates, Patil said.
An amount of Rs 3.77 crore was given as loan against gold to these customers, another police
official said. The money was siphoned-off by Nadar after giving the dummy customers a small
sum. Efforts were underway to recover the money from him. He has been charged under Indian
Penal Code Sections 420 (cheating) and 34 (common intention), and a hunt is on for the 12
people who helped him in the scam. Since Nadar also worked as a valuer with the bank's
branch in Sion area, the police are trying to find out if he conducted a similar fraud there also,
the official said. Following his arrest, the accused was produced before a local court which
remanded him in police custody till September 17.

Ethical Issues / Problem:

Duping of Gold Crore and setting dummy customers

Alternative Courses of Action:

ACA #1: Install Security Features in the bank that will monitor the Gold crore

 Advantages
- Bank assets will be secured
- Any employee won't be able to enter bank premises without authorization
- Suspicious or unauthorized personnel's activity can be detected
 Disadvantages
- Costly

ACA #2: Regularly monitor bank's assets

 Advantages
- Fake Golds can be easily determined
- Fraudsters won't have chance to fake gold crores
 Disadvantages
- Time consuming

ACA #3: Use effective measures to detect fraud in gold loans like intensive KYC evaluation and
close monitor of client’s activities

 Advantages
- Unusual activities that might indicate fraud can be detected
- The possibility of fraud and identity theft can be curtailed due to close monitoring
 Disadvantages
- Time consuming

Recommendation:

Install Security Features in the bank that will monitor the Gold crore

- Look for a trusted security device that best fit the bank's needs

- Install the security device in the bank premises

- Do a test run to ensure effectiveness

 - Closely monitor the security device

Conclusion:

This concludes that the best solution for the bank's problem is to install Security Features
in the bank that will monitor the Gold crore.
Title:

Philhealth probes 8,000 fraud cases

Case Synopsis:

The Philippine Health Insurance Corporation (PhilHealth) said that it is investigating more than
8,000 cases of fraudulent activities committed by some of its partner health institutions.
PhilHealth spokesperson Dr. Shirley Domingo said that the alleged “ghost dialysis” scheme of
WellMed Dialysis & Laboratory Center is not an “isolated case.”

“This is not an isolated case. Our records show that currently, we are investigating up to 8,900
plus cases that are pending in our investigation department,” Domingo said.

Domingo said that the fraudulent activities that they are currently investigating include ‘ghost
patients,’ false claims, misrepresentation, and upcasing wherein sometimes it’s just a cough but
they will turn it into pneumonia. The alleged “ghost dialysis” scheme of the said Quezon City-
based medical facility was bared by its two former employees, saying that the medical
institution has been filing claims for dialysis sessions on behalf of their patients who were said
to be already deceased. In relation to this case, the corporation has filed 28 counts of
administrative cases of claims for non-admitted/treated patients; misrepresentation by
furnishing false or incorrect information; and breach of warranties of accreditation/
performance commitment against the mentioned dialysis center.

Ethical Issues / Problem:

Ghost patients, false claims, misrepresentation, and upcasing

Alternative Courses of Action:

ACA #1: Hire another human resource that will monitor the accuracy of claims

 Advantages:

- Claims of members will be validated

  Disadvantages:

- Costly and Time-consuming

ACA #2: Implement a strict claims evaluation

 Advantages:

- Members' claims will be evaluated and accurate claim amount will be given

- Upcasing of claims will be avoided

 Disadvantages:

- Release of claims will be delayed.

ACA #3: Have an open door policy that encourages early reporting of concerns

 Advantages
- False claims will be avoided
- Fosters an atmosphere of trust between the corporation and the members
 Disadvantages
- Difficult to maintain

Recommendations

Hire another human resource that will monitor the accuracy of claims
- Review job applications
- Test candidates
- Interview selected candidates
- Choose candidates based on pre-determined selection criteria
- Perform background and reference checks
- Orient and train the selected applicant about the job description
- Continuesly monitor

Conclusions
This concludes that the best solution for the corporation is to hire another human
resource that will monitor the accuracy of claims.
Title:

The Barings Bank's Collapse

Case Synopsis:

Founded in 1762, Barings was among the largest and most stable banks in the world.
However, thanks to unauthorized speculation in futures contracts and other speculative
dealings, it ceased operations on February 26, 1995. The direct cause was its inability to meet
its cash requirements following those unauthorized trades. Even efforts by the Bank of England
to arrange a rescue package could not avert the inevitable collapse.

Leeson's reputation since then was one of a rogue trader, operating without supervision or
oversight. At the time of the loss, he was assigned to an arbitrage trade, buying and selling
Nikkei 225 futures contract in both the Osaka Securities Exchange in Japan and the Singapore
International Monetary Exchange, in Singapore. However, instead of initiating simultaneous
trades to exploit small differences in pricing between the two markets, he held his contracts,
hoping to make a larger profit by betting on directional moves of the underlying index. Making
matters worse, Leeson hid is losses with accounting tricks. Had the bank discovered this earlier,
it would have taken large but not devastating losses and remained solvent. Unfortunately, the
firm was declared insolvent less than a week after Leeson's trading losses were finally
discovered. After this episode, Leeson was arrested and sentenced to six and one-half years in a
Singapore prison. However, he was released in 1999 after a diagnosis of colon cancer.

Ethical Issue / Problem:

Unauthorized trading

Alternative Courses of Action:

ACA #1: Strictly implement trading policies

 Advantages:
- Previous mistakes can be avoided by implementing strict adherence to the company’s
trading policies
 Disadvantages:

- Effectiveness is not assured because fraudsters can still pass through the investigation
ACA #2: Impose sanctions for unauthorized trading

 Advantages:
- Illegal trading will be avoided because of sanctions
- Employees will be afraid to commit illegal tradings because of the penalty
 Disadvantages:
- Might inflict fear and resistance

ACA #3: Circularize staff's trading activities on a monthly basis to confirm account balances

 Advantages:
- Bank tradings will be monitored
 Disadvantages:
- Too much work
- Time Consuming

Recommendations:

Strictly implement trading policies

- set of substantive trade policy objectives focusing on a range of trade negotiating
objectives and the flanking policies required to pursue such objectives in a sustainable
manner;
- start with properly coordinated inter-agency consultations and extending to
institutionalized trade and development policy dialogue
- Rationalize trade documents and related procedures
- Implement effective trade and customs enforcement
- Review and assess results

Conclusion:

It would be best for the bank to implement strict trading policies.