Major corruption payments to Singapore Ikea manager

 

A Singaporean businessman who paid an incredible SGD $2.4 million to Singapore Ikea’s food services manager over six years has pleaded guilty to 12 counts of corruption involving $761,020. Andrew Tee Fook Boon, owner of business AT35 Services, gave monthly bribes to Mr Chris Leng Kah Poh, then Ikano’s food services manager [Ikano is the local franchisee of Inter Ikea Systems B.V. which operates Ikea in Singapore.

The purpose of the payments was to influence Mr Chris Leng to favour him in placing orders for food products with AT35 and later Food Royale Trading.

Andrew Tee had been operating a scrap metal and waste material disposal business in 2002 when he accepted a business proposition to supply food - mostly raw marinated chicken wings - to Ikea. Yes, those chicken wings consumed by the plateful at Ikea Tampines and Alexandria with plenty of chilli sauce.

Between January 2003 and July 2009,  Tee and his alleged accomplice  Lim Kim Seng had on over 80 separate occasions, given Mr Leng sums of money derived from the profits made by AT and/or Food Royale from the business dealings with Ikea. Following the discovery of the fraud, Mr Tee paid $1 million compensation to Ikano. He could have been fined up to $100,000 and/or jailed for up to five years on each charge.

The fraud case is believed to be one of the biggest amounts involved in a private corruption case in recent years. The corrupt relationship existed from 2003 through to 2009 before being discovered.

Some commentators have questioned how the corrupt relationship was allowed to flourish and continue for such a long period and such large sums were paid to the Ikea manager without being detected.

Possible red flags that could have arisen and, had they been noted by Ikea management at the time, may have led to the corrupt relationship being exposed sooner include:

The Big Spender
The recipient of large corrupt cash payments resort to buying luxury items or else taking expensive holidays [though some chose to pay down debt and keep a low profile]

The Gift Taker
The manager who is willing to accept inappropriate or questionable gifts from suppliers is likely to succumb to corrupt approaches

The Rule Breaker
The recipient of corrupt payments will often take it upon himself to make decisions relating to the contract and payments and seek to exert total control. The recipient will merrily bend or break rules to suit himself or else have subordinates turn a blind eye. Some may involve themselves in areas that are not part of their responsibility and interfere in an attempt to control the contract.

The `Odd Couple’
Corrupt payers and recipients often appear to have friendly relations and meet up socially, though they don’t seem to make a normal fit. The lure of cash and profits outweighs the social awkwardness.

The Explainer
The corrupt receiver will frequently take steps to cover up any failings of the payer’s products or services; the receiver will explain away the poor quality, later delivery or excessive prices as necessary because the payer is `specially qualified’.

The Needy One
The corrupt receiver may have financial pressures resulting from gambling, substance abuse, debt problems or else family pressures. Observing these pressures may help pre-empt them and take away the need for corrupt payments.

Do you need to know more about our services and how Regents can assist you with preventing fraud and money laundering? Simply go to our Fraud Investigation page for further details and us send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

Fake iPhones for sale

Mobile phone manufacturers have struggled for years to combat the problems of counterfeit batteries and phone accessories being sold in city markets and dubious phone stores.  Asia and the Middle East have been a battleground as phone manufacturers sought to stop fake batteries, ear-phones, cases etc being sold with impunity.

However, now the problems have gotten far worse; whole fake phones are being made with substandard operating software. Earlier this year, an associate returned from China with a cheap phone which he claimed was a bargain. After a few weeks the phone was malfunctioning and on closer inspection the label indicated it was a `Blueberry’ phone, not the Blackberry he thought it was.

Now whole phones are being copied illegally and sold as the genuine product. As per usual, the epicentre of this fake trade has been in China. The confluence of lax enforcement of IP [Intellectual Property] rights, a hungry demand from consumers for the latest products at a very low price and the technological ability to make these products has meant that it is now possible to buy an entire fake iPhone or Blackberry in China.

Recent news reports indicated that online sites in China were listing the fake iPhone 5 for as low as 200 Yuan or about US$33. A stunning offer considering Apple has yet to officially launch the genuine version of the phone.  Some of the phones on offer use names like “HiPhone 5″ or “iiPhone 5″ in a thinly veiled attempt to avoid prosecution for trademark violations. However, images of the devices show the Apple logo and they have the shape and finish to look just like an iPhone.

After finding success in selling these phones in Asia and the Middle East,  these counterfeit products have begun to show up for sale in the US and Europe. Some anti-counterfeiting experts estimate that up to 10 percent of technology products sold worldwide, or roughly $100 billion worth of technology product transactions each year, are for counterfeit or fake products.

In the US & Europe, these products are often sold on the web by small to medium sized traders via online marketplaces, like eBay or Craigslist. This is known as the `secondary market’ where manufacturers and large scale distributors can offload mobile phones which may not be popular or out of date at a cheaper price without affecting their main markets. But this sales tactic can be exploited by those selling counterfeit phones as consumers are duped into believing that they are legitimate products.

How to spot whether that is a fake iPhone or Blackberry
If you are searching on the web for a new phone or else travelling and spy what seems to be a great deal, here are some tips to avoid becoming a victim of these fake vendors:

Is the price too good to be true?
As mentioned above, genuine Resellers offer bargains on the phone models that didn’t sell very well or else are out of date. A genuine reseller will be unable to offer significant discounts on new devices that are in high demand or have just been released.

A suggestion is to check prices online from a variety of sources to get an idea what the general going rate is. If you see a price that’s too low, then that’s a red flag that it’s likely a fake.

Unit numbers for sale
Does the reseller claim to have an unusually high number of units of the same device to sell? Manufacturers like Apple and Samsung are adept at controlling their sales channels. This means that retailers are unlikely to have large excess inventory to offer to resellers. Therefore it’s unlikely that a reseller on eBay or Craigslist would be in a position to offer more than a few of the latest phones on the market.

Does the device look real?
This might be tricky for online shoppers looking for the iPhone 4S, since it looks just like the iPhone 4. But when you look at the pictures and the product descriptions, you should know which features are supposed to be available and which are not. And if the advertisement lists features that aren’t on the official spec sheet for the device, it’s probably not legitimate.

Does the seller offer a viable return policy?
If not, then be very worried. Do some research to check what has been the experience of other buyers from the vendor and weigh up whether they are legitimate.

Does it have a warranty?
In addition to the manufacturers 12 month warranty, many authorized resellers also offer their own versions of extended warranties. A reseller that doesn’t offer such warranties may be selling fakes.

Should you be in a store and in the position to handle the iPhone, try out the following:

Test the touch screen
Genuine iPhone touch screens react only to objects that conduct electricity (i.e. your fingers). Authentic iPhones screens will not work with plastic or metal styluses. A good test to try early on

SIM Card slot
Any version of the iPhone has only one SIM card slot. If there’s more than one slot, then that’s all you need to know.

Battery
The iPhone is sealed so that batteries can only be changed by opening up the whole phone, preferably by your local Apple store. If the phone has the ability to change the battery or else the box comes with a spare battery, then keep on walking

Colours
If the iPhone comes in any other colour except black or white then it’s a fake.

Start Up mode
When you press the “on” button, a genuine iPhone will display a black background with a silver border and four rows of icons. Many fakes will have more icons on display or a different coloured background. If you have a friend who’s familiar with the model, ask them to handle the phone and see how it feels

Better safe than sorry, iPhones are a big purchase item and you need to be sure you’re getting the genuine product

Do you need to know more about our services and how Regents can assist you with Intellectual Property issues? Simply go to our Intellectual Property page or else send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

Theft of military data drive exposes security flaws

 

Top secret defence documents belonging to the commander of Australian operations in the Middle East stored on a USB drive went missing from the backpack of a military aide travelling on a commercial flight from Dubai to Pakistan.

It is believed the USB went missing after the flight arrived in Kuwait for a scheduled stop over. When the flight arrived in Islamabad it was disclosed by the commercial that a number of the checked in bags had been lost and it took several days for them to be all located.

The loss of the material was considered to be a major security incident by defence authorities and highly likely to be the product of a deliberate theft operation by undisclosed foreign agencies. The incident highlights the risks of transporting sensitive information stored on a USB drive without proper risk assessments or security protocols in place and being undertaken.

Australian Defence has declined to reveal what exactly what was on the drive but it appears that it did contain the emails of Major-General Cantwell and the aide, downloaded from the Defence Secret Computer Network. An intelligence source said the increasing use of powerful electronic storage devices to contain classified material has become a particular concern for governments worldwide.

Though your organisation may not have military secrets stored on devices or laptops, it is fair to state that they do contain information that would be of use to a competitor and the inadvertent leaking of information would harm your company. Some of the data may be commercially sensitive whilst others you are obligated to store securely such as names and addresses of clients, credit card numbers, financial information, medical information etc.

Prevention is far better than cure in this situation; in fact, once the data is loose on the web or being sold to other parties there is no real cure. Loss of client confidence and crippling costs to remedy the situation such as offering free credit check updates and cancelling accounts means that if this situation can be avoided, it should.

Therefore, it is recommended that a company or organisation should take at least the following steps in regards to information security for transported data:

  1. Conduct a risk review as to what type of company or organisation data is likely to be transported on a drive or laptop
  2. Draw up a security policy determining who should be authorised to transport sensitive data and what precautions must be taken
  3. Identify the individuals [salesmen, executives, managers] whom are most likely to be transporting the data – decide whether benefits outweigh risks of data loss
  4. Ensure that these individuals have been full briefed as to company security policies including complex password protection on all devices
  5. Prevent unauthorised personnel from being able to copy or duplicate sensitive data onto drives via IT protocols
  6. Consider having all  data stored on external drives being encrypted using standard software such as True Crypt
  7. Consider having all laptops and smart phones link to servers via Citrix or VPN so that minimal data is stored on the device
  8. Create an emergency system to track any stolen or missing devices with a regular asset review to ensure all data is being maintained
  9. Implement a data clean up system so that all drives are sterilised when are no longer needed

Data loss can occur due to bad luck through to being the victim of a targeted operation by a third party. At best there is severe embarrassment but worst case scenario can lead to loss of clients and hefty fines from regulators. Creating an atmosphere of data protection among the organisation can go a long way to preventing such losses.

Do you need to know more about our services and how Regents can assist you with preventing information loss? Simply go to our Cyber Threats page for our phone numbers or else send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

 

‘Flash robs’ create new challenge to retailers

Just as Twitter, face book and other social networking sites have allowed dissidents to plot the overthrow of dictators in the Middle East, groups of criminals are utilising these tools to plan coordinated thefts from stores in the USA.

`Flash mobs’ was the term given to groups of people who communicated via the internet to create harmless if strange activities such as all standing on one leg in unison outside a subway station. The mob would then disperse peacefully and there was an element of intrigue and fun to the event.

But `Flash robs’ are far from fun and have a sinister criminal intent. Flash robs are reported to be swarms of teenagers and young adults who plot via Twitter, phone texts and facebook to descend on stores together and steal any valuable  merchandise they can get their hands on.  They then disperse before the Police or security can apprehend them.

The use of new media and communications devices to organise robbing sprees was underlined during the recent riots in England when criminals were using Blackberries and FaceBook to organise mobs to break in and loot shops.

Though information is scant as to the identities of the flash rob members, it is believed that these groups maintain contact via social networking and do meet on occasions to plan upcoming robberies. They are wary of sharing personal information to avoid undercover police or informers and may be members of criminal gangs. According to media reports, such “flash rob” incidents have occurred this year in Cleveland, Chicago, Las Vegas, Boston, Philadelphia and St. Paul as well as in Canada.
The National Retail Federation monitors such activity and said those most at threat were department stores and big-box chains, as well as grocery and drugstore operators. Those that have experienced a flash rob, sales assistants and other shoppers, have been intimidated by the antics of the mob as they seek to disorientate people as they grab merchandise before fleeing. The National Retail Federation has published a white paper on the problem and issued the following advice for retailers:

  • As with other crimes, retailers, mall security and law enforcement agencies should continue to share intelligence about anticipated incidents.
  • Sales assistants should report to store management or Loss Prevention whenever they see unusually large gatherings of people inside or directly outside the stores.
  • If safe to do so, use customer service techniques to discourage crime activity.
  • Attempt to discourage the thefts by re-positioning associates near key areas of the store and high-value merchandise.
  • Instruct employees and customers to retreat into a secure part of the store.
  • Any CCTV video of the event can assist in the documentation process and should be readily available for law enforcement officials (following company protocols for release).

Monitoring of the internet
It is recommended that all retailers which may be at threat should create Business Intelligence program to monitor social networks and websites for indications of a planned event at their outlets. The program should include tracking the brand names and locations of the outlets with a daily report to update management as to any issues.

The program should regularly be reviewed for any changing trends as well as monitoring national media for reports on flash rob incidents. Use of free services such as Google or Yahoo alerts is a start but other sources should be used including Factiva and other contacts recommended by the National Retail Federation.

Information sharing with local law enforcement agencies is an imperative as they may already have intelligence on these mobs as well as able to deploy officers to apprehend the mob and arrest them for organised theft and larceny.

Is Speak Asia Online to be trusted?

Despite being the home of software programmers and large scale IT out-sourcing companies, the Indian public has not been exposed to internet sensations, rumours and intrigue to the same extent as countries such as the USA.

Until now.

The online opinion company Speak Asia Online is a Singapore-based company which is now being investigated by Indian authorities for alleged financial fraud and conducting business in India without a licence. Some claim that Speak Asia Online has all the hallmarks of a classic internet Ponzi scheme whilst its supporters claim that it is a legitimate business venture which is being criticised for its own rapid success.

Speak Asia Online claims that it is a legitimate company which pays its’ subscribers a small sum each time they complete an online questionnaire regarding a product or service. Speak Asia Online claims that it is engaged by various companies to conduct market research with Indian households.

Speak Asia Online claims to have attracted nearly two million members in India since it started operations in January 2010. A company statement says it has paid out more than $50 million to survey takers and reported revenue of $80 million in the past nine months.

But there is a catch. Of course there is.

To become a subscriber, you must first pay fees of around Rs10,000 which provides a ‘Surveys Today’ e-zine, an online magazine, for one year and the opportunity to enrol as s panellist. A panellist can be paid up to Rs900 to fill up two surveys of about 12 lines each.

Therefore, after completing around eleven surveys a panellist would start to earn an income from Speak Asia Online. Panellists can also earn money by recruiting other panellists to join and thus receive a commission.

This has left some detractors to conclude that Speak Asia Online is some sort of fraud, scam or Ponzi scheme and should be investigated or shut down by the Indian government. Speak Asia Online protests that it is genuine business and has broken no laws, offering to co-operate with the authorities if need be.

Supporters also point out that they are earning an income from Speak Asia Online as panellists and those complainants should mind their own businesses.

In order to assess whether Speak Asia Online is a genuine business, fraud experts would recommend assessing the following points in relation to Speak Asia Online:

Business model – does the model itself make sense?
This is hard to answer directly. Certainly there are genuine businesses which have operated for decades conducting surveys. But the surveys are focused, relatively small and usually conducted face to face to ensure quality. Speak Asia Online does not follow this path.

People can also earn money by recruiting other subscribers. This has generated a group or recruiters seeking to find new subscribers to continue their income stream.

Analysts have seen this as the trait of a classic Ponzi scheme, sucking in new cash to pay out to earlier subscribers. Speak Asia Online needs to demonstrate that this is not the case.

Does the subscriber need to pay?
Definitely and it is paid upfront. This can be viewed as a definite red flag for a possible scam. It has been noted that Speak Asia Online charges subscribers to be a panellist and receive an e-zine – smartly declining to promise that later payments will be made or else that this is an investment scheme.

Location of the business – does this make sense?
Not at first blush. Though Speak Asia Online is only active in India it has few employees or offices there. Instead, it is a registered company in Singapore. It could be argued that it makes sense for taxation but this doesn’t make business sense.

It has been noted that reporters from Star TV are said to have visited the business address in Singapore and found that there were few people present who claimed they were not involved with Speak Asia Online. This certainly raises more red flag concerns.

Business history – how long has it been running?
Not very long; about 18 months according to the registered documents held by ACRA in Singapore. It should be noted that the business has changed its’ name two times; from Haren Technology Pte Ltd to Pan Automotives Pte Ltd. Neither of these former names suggests that the previous business incarnations were internet based opinion operations.

A cause for concern.

What do the top people of Speak Asia Online say about the business?
Not much and not very convincing.

Speak Asia Online CEO (India) Manoj Kumar claimed during an interview that Speak Asia Online was engaged by ICICI Bank. Following a refutation by ICIICI Bank they there were not a client, Kumar back tracked and said that his earlier claim was a mistake. Kumar allegedly claimed a number of other prominent clients which were later found not to have any relationship with Speak Asia Online. Commentators stated that the CEO ought to know who his own clients are.

At a press conference in Mumbai, Kumar struggled to define exactly what Speak Asia Online does. He denied that they are a direct seller or a company that makes money based on referrals.

Is the company properly regulated?
Not really. It operates in an economic area which has been overlooked so far.

The Indian Direct Selling Association (IDSA) has asked the government to come up with a regulatory framework that will define direct selling, stipulate how it should operate and pass laws to protect consumers.

Meanwhile the Ministry of Corporate Affairs (MCA), Economic Offences Wing, market regulator Sebi and bank regulator Reserve Bank of India are reviewing different aspects of Speak Asia Online’s operations.

What other bad news has Speak Asia Online experienced?
The Singapore bankers of Speak Asia Online, United Overseas Bank, are reported to have declined to continue to be their bankers. Speak Asia Online claimed that they elected to change banks but the confusion suggests that United Overseas Bank no longer wanted to be associated with Speak Asia Online. Does United Overseas Bank know something we don’t?

 

Speak Asia Online may prove it’s detractors wrong and thrive in a new business sector in the budding Indian market. If it can be more transparent about the operations and exactly who its’ clients are, then it should be able to save the day.

Watch this space.

 

Do you need to know more about our services and how Regents can assist you with preventing fraud and money laundering? Simply go to our Fraud Investigation page for further details and us send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.

Tips for better use of Due Diligence

It is all too common to hear about the business that went broke or lost millions following a decision to enter in an investment, joint venture or merger with another company that turned terribly sour. All that glitters is not gold. The usual reaction is to query how on earth such bad mistakes were made and why the warning signs and red flags went unheeded. “Didn’t these people know how to do Due Diligence?” is the common refrain.

That’s a valid comment — proper Due Diligence can certainly prevent such business fatalities. But that’s not where Due Diligence starts and stops. Whatever the type of the business relationship; whether it is with a local family company or a multinational group, you are electing to engage in a multi-year relationship with a business, organisational culture and people you barely know.

As the business progresses and the business cycle moves, relations will be strained due to many factors including; difficult clients, dropping revenue, slim profit margins or loss of key agents. How will this affect the relationship and what will it need from your side to keep things on an even keel?  What procedures and agreements can be implemented to resolve issues before they become points of conflict?

The employment of proper Due Diligence can address these issues in a systematic and methodical way prior to them occurring. Due Diligence in business should not be the preserve of upscale law firms or PE [Private Equity] firms; any business or corporation seeking to undertake a major business or financial transaction should employ some measure of Due Diligence.

Due Diligence means different things to different people. For accountants it usually relates to the P&L, asset register and balance sheet whilst a lawyer will be looking more at the IP, contract agreements and related clauses.

However, commercial Due Diligence seeks to identify any red flags or issues with the business in areas including:

  • Backgrounds of key personnel
  • Product or service – state of the current market
  • Key customers – what are the long term relationships, chance of deserting the firm
  • Litigation – have they been party to or subject of civil litigation
  • Intellectual Property – what do they possess, is it owned or licensed, registered, integral to their business
  • Suppliers – what are the relationships, are the suppliers being paid on time or any possible disputes
  • Government involvement – need for permits or licences, how may this affect business
  • Competitors – who are they, are they related, what threats do they pose
  • Agreements – what other parties hold a stake in the business [unions, NGOs etc]

As Due Diligence becomes better known among business people and executive teams, issues arise as to how it should be applied, what phase of the relationship and under what circumstances. Proponents of Due Diligence often come upon objections or queries.

We have summarised some of these objections below with corresponding rebuttals:

Issue 1
Only investor firms conduct Due Diligence such as banks, lenders and Private Equity firms.

Answer 1
Though investor firms have been the leading users of Due Diligence [often simply as a legal requirement written into the deal], Due Diligence should not be limited to these users solely. Any business or organisation seeking to enter an agreement which involves a risk or threat to the business should undertake some form of Due Diligence to identify and potential risks and seek to address and mitigate them. Why not do as the experts do?

Issue 2
Some people or businesses take offense when told that there will be a Due Diligence profile undertaken.

Answer 2
These are far fewer in number than you’d think. Anyone willing to benefit from an investment, contract or Joint Venture should expect to have some form of background check done on them and their business – they’ve filled in a credit card application before with no tears.

The nature and focus of Due Diligence will be adjusted to suit each particular transaction. Most participants will be impressed that you have your act together and are taking the relationship seriously and want it to be successful, where’s the harm in that?

Issue 3
We did a media search and it showed that the business was once mentioned in a Supreme Court case – that makes them unsuitable.

Answer 3
This piece of information has to be viewed in context. Was the business a defendant or litigant or possibly an uninterested party? When did this happen and what were the findings of the court? Or was the matter discontinued and may be considered frivolous? Is the same management in place or have there been material changes?

A proper Due Diligence exercise will seek to lay out the details of any court case and what implications this had on the business or the main parties. Jumping to conclusions based on one incident is impractical and doesn’t grant the exercise the patience that it deserves.

Issue 4
Due Diligence is all about looking for problems such as a lawsuit by a former employee or action by a government department

Answer 4
Though these can be important facts uncovered during Due Diligence, they should be properly reported in context and due weight given to the issue. [If the issue was toxic leaks from the plant poisoning local drinking water, that would merit serious attention. If it was a minor fine for an unregistered vehicle then that would be relegated down the list of importance and reporting].

As mentioned above, Due Diligence is usually engaged to identify threats or issues not disclosed in the normal business relationship exchange. These points may include criminal record checks, civil litigation checks in state or federal courts, product history, key markets, Intellectual Property and a review of each office or location. The onus is on the profiler to meticulously search and review databases, compile the results and conduct discreet interviews with human sources whilst knowing from experience what to look for and the significance of the results.

Issue 5
Due Diligence is too focused on talking to people who’ve dealt or worked with the subject company.

Answer 5
Human intelligence can be invaluable in providing timely and intricate information regarding a company or its senior personnel. However, caution has to be taken upon relying too heavily on their disclosures with cross referencing; is the source aggrieved or enamoured with the company to such an extent so that his information is polarised?

It takes an experienced investigator and profiler to obtain useful information in an unbiased manner and then seek to weigh up that information against what else is known or reports from other individuals. This takes time but does produce a well rounded and complete picture of the company at the time.

Issue 6
Due Diligence can make some people feel uncomfortable

Answer 6
Again, this is because they are unfamiliar with the Due Diligence process. We are all affected by Due Diligence processes in our working lives from applying for a bank loan [confirming our identity, ability to repay the loan etc] to obtaining a passport [divulging personal information to the government].

As long as the Due Diligence process is explained thoroughly along with the benefits and positives from seeking to get to know the other party better before becoming involved in a long term relationship there are few dissenters from our experience.
Do you need to know more about our services and how Regents can assist you with Due Diligence? Simply go to our Business Intelligence page for our phone numbers or else send an email to contactus@regentsriskadvisory.com with your contact details and we will respond at once.