Saturday, August 22, 2015

Cab Drivers' need to undergo verification mandatory - Cab drivers’ details to be verified

With more questions raised on the safety of women passengers in radio taxis, city police are taking no chances. They have asked cab operators to furnish details of drivers and get them verified from police stations. 

Confirming the directive to cab operators, DCP (law and order) Shekhar HT told TOI that service providers have to pay a minimum fee for police verification. 

The move comes in the wake of an alleged case in which a cab driver molested a woman passenger in Gurgaon. 

Cab services started in Mysuru in August 2014. Nano Taxi was the first to start its services in Mysuru followed by TaxiForSure, Ola and Meru. In the past 10 months, these cab operators have developed a good customer base. 

Nano Taxi general manager R Vijaykumar said that a majority of its customers are women. "Since about 67% of passengers are women, we take utmost care to ensure their safety. We track every ride and take feedback from the passengers. So far, there has not been a single complaint of misbehaviour against any of our 75 drivers. We have been training our drivers on how to behave with passengers, especially women," said Vijay. 

Vikram Lakshminath, an assistant manager with Ola, said its cabs are fitted with GPS devices. "Details of our drivers have been submitted to police for verification," he said.

Cab Drivers' Verification - Police begin verification drive for cab drivers

Traffic police are starting a drive where they will meet private taxi owners over police verification process. 

In the wake of sexual assault of a woman by an Uber cab driver in Delhi, the Mumbai police have decided to ask private taxi operators to subject their drivers to police verification and also launched a separate drive to check antecedents of private taxi drivers. 

Joint commissioner of Police (Traffic) B K Upadhyay said private cab operators hired as drivers anyone with a driver’s licence. “There is no legal provision on checking the background of the drivers while hiring them,” he said. Upadhyay said many women had expressed concerns through the social media about their security while travelling in a private cab. “Many women have tweeted to us and expressed worries on other social media,” said a traffic police officer. To address these concerns, the traffic police are starting a drive where they will meet private taxi owners over the next few days and ask them to get all their drivers undergo a police verification process. They will also meet fleet owners to discuss their security norms and check if they have installed GPS devices in their vehicles as claimed. 

Mumbai Police Commissioner Rakesh Maria on Monday instructed all police stations to contact private taxi operators in the city and check antecedents of all the drivers employed with them. 

“We will check our records to see if any of them have ever been arrested or convicted for a crime and take appropriate action,” said Mumbai Police spokesperson DCP Dhananjay Kulkarni. An officer said one of the points under discussion was what action could be taken against drivers or taxi operators in case of non-compliance.  

“Registering details of all taxi drivers in our records will also send a message to them they are under the scanner, which will act as a deterrent,” said the officer. 

Tuesday, August 18, 2015

Banks liable for fraud by its employees - India Today

Banks cannot disown their liability to the depositors in the event of their employees committing fraud on the depositors during the course of their employment with the bank.

By Every one of us has one or more savings, current or fixed deposit accounts with one or another bank. In the case of savings bank account the pass book is given to the account holder wherein the entries of the deposits or withdrawals are made at intervals. In this connection, two questions arise.
One, do the entries in the pass book have any sanctity? And two, would the bank concerned be liable to make good the loss to the account holders in case the bank's employee(s) embezzle the depositors' funds by manipulating the entries in the pass books? The above questions arose in a bunch of cases, which were recently decided by a common judgment by the National Consumer Disputes Redressal Commission on September 7, 2010. Fifteen depositors, who were villagers living in Lakhnaura, District of Ambala (Haryana), noticed that their pass books indicated certain credit balances that were at variance with those appearing in the bank's ledger account. The discrepancy indicated a number of withdrawals which were never made by the depositors. Besides, some of their fixed deposits too were shown to have been prematurely withdrawn.
The bank involved in all these cases was the Haryana Gramin Bank, which has a branch office in the village where the depositors concerned were residing. All the depositors reported the matter to the bank, which on investigation found that the withdrawals from the accounts of these depositors were made without any payin-slips or cheques issued by them and the pass books were also manipulated so as not to show such withdrawals.
All these amounts were frittered away by Pawan Kumar Lehna, exbranch manager.
While criminal cases were filed against the ex-branch manager and some other employees, complaints were also filed against the bank before the District Consumer Disputes Redressal Forum, Rohtak where the bank denied its liability on the plea that the fraud was committed by its employee(s) against whom the matter was pending in the criminal court and that the bank was in no way responsible to the depositors. Repelling the bank's contention, the District Consumer Forum directed the bank to pay all the depositors the amounts which had been unauthorisedly withdrawn from their accounts. An appeal was filed by the Haryana Gramin Bank before the Haryana State Consumer Disputes Redressal Commission, Panchkula which by its order dated March 19, 2010 held the bank vicariously liable for the fraud and embezzlement of the amounts deposited by its customers.
The bank concerned came up before the National Consumer Commission in 15 revisions filed against the order of the Haryana State Commission which, by its order dated September 7, 2010 dismissed all of them by upholding the orders passed by the State Commission and the District Forum.
The judges relied on the judgment of the Supreme Court in State Bank of India v. Smt.
Shyama Devi AIR (1978) 1263 (SC) wherein the apex Court had held that "a master is liable for his servant's fraud perpetrated in the course of the master's business, whether the fraud was for the master's benefit or not, if it was committed by the servant in the course of his employment". While the above judgment will not only be of great help to banks' depositors who go by the pass book entries but also serve as a warning to banks that they cannot disown their liability to the depositors in the event of their employees committing fraud on the depositors during the course of their employment with the bank.
The judgment also calls upon the depositors not to take the entries in their pass books on their face value but to check their accounts with the banks at regular intervals.
Author is an advocate & editor of Consumer Protection & Trade Practices Journal (CTJ) rosykumar2000@ yahoo. com

Ex-employee couple accused of Rs 60 lakh fraud

GURGAON: A former senior employee of an online business portal was arrested on Saturday for allegedly cheating the company out of nearly Rs 60 lakh, with the help of her husband. A city court later sent her to judicial custody.

Police said the accused, Bableen Anand, and her husband Varun, residents of Kirti Nagar in Delhi, used to work with the Udyog Vihar-based firm till six months ago, and used their position to launder money from the official accounts of the company to their relatives' and personal accounts.

Global Enterprises is an online portal that books airline tickets, hotels and cabs at discounted rates. It claimed in the FIR, filed on April 10, that the couple used to transfer funds from the accounts of their subordinates to their personal accounts.

Since they were heading separate teams, the couple knew the account details and passwords of the persons working under them, and had access to the money, police said. Varun used to transfer the funds to Bableen's account and she used to further transfer them to other non-official accounts.

A year ago, Varun quit the company and started a new portal,, which was set up with the fraud money collected during his tenure. Six months after he quit, Bableen also left the firm and joined her husband in the management of their portal.

Police said both of them had hacked into the accounts of current employees to gain access to the funds and used to launder money even after they had quit the firm.

After investigation by the cyber crime wing, police raided the couple's house and recovered Rs 50,000 from there. Cyber crime cell officers have so far found only 10% of the documents related to the fraud and have calculated a total loss to the tune of Rs 60 lakh to the company.


KPMG’s Latest India Fraud Survey Kicks Up Some Dangerous Statistics

I was intrigued recently when the KPMG India fraud survey 2012 (download it here) threw up a shocking conclusion – Corporate India dubs rising fraud as an inevitable cost of business.  Close to 55 % of respondents polled indicated that their organisations experienced fraud in the last two years vis-à-vis 45 % in the 2010 edition of KPMG’s fraud survey.
However, it is surprising to note that 71 percent of the respondents think of fraud as an inevitable cost of doing business. This includes 80 percent of respondents who stated that they had experienced fraud in the last two years. What is hardly surprising is the fact that Indian companies outnumbered multinational firms in this view. I agree with the report’s view that this is a dangerous attitude to have as it could lead to organisations having a tolerant approach towards fraud and subsequently not investing enough in the appropriate fraud risk management controls and framework. It also translates into a culture of merely reacting to fraud and not proactively taking steps to mitigate it.
Let us look at the graphic below to understand better what a company’s employee feels about the state of corporate fraud in India today:

* Info & Graphics Source – KPMG India Fraud Survey 2012
We can see that the perception levels for frauds like money laundering (47%), internal reporting related frauds (44%) and intellectual property fraud (40%) too are significantly higher (compared to KPMG’s 2010 survey). These frauds today rely on technology to increase their impact. Let us now look at the sectors that are perceived as most vulnerable to fraud.

* Info & Graphics Source – KPMG India Fraud Survey 2012
It does not require a survey to realise that the financial services and banking industry that is so heavily reliant ontechnology faces the gravest threat. While technology can be a great facilitator for the business, it can also offer an equally potent platform for committing frauds like cybercrimephishing and data theft.

Possible misuse of technology in the banking sector includes use of banking access for over payments to vendors / self bank account, sharing of potential confidential information and misuse of company’s technology resources for unauthorised activities including conflicting business relationship. Additionally, providing services on mobile and social media platforms with limited knowledge of the security requirements, poses threats to customers as well as financial institutions. Some of India’s co-operative banks may choose the cheapest IT Services company to design and develop their bank’s internet banking website but in such cases cheap may not be best!

Procurement function continues to be most vulnerable to fraud

Survey respondents have rated procurement, sales and distribution and inventory as the most vulnerable processes within an organisation. These areas being characterised by large number of stakeholders, multiple touch points, increasingly complex processes involving a significant proportion of organisations’ funds, it is not surprising to see this finding. Additionally, these processes involve a high degree of interaction with external stakeholders like vendors and customers where collusion can override certain internal controls.
Despite the widespread acknowledgement of the vulnerability of these processes, it is surprising to note that organisations have failed to implement basic controls. Due diligence of vendors before selection, involvement of representatives from multiple departments in the vendor selection process, and adequate segregation of duties and controls over access rights, are some of the controls which may help organisations in managing these risks better notes the survey.
This brings us to a very important fact – something that most companies fail to overlook until it’s too late. As Hollywood would say:

The Enemy Lies Within

Employees within organisations is the single largest group well equipped to perpetrate fraud or assist an external team to do so. Like an impending implosion, the larger threat of fraud lies within an organisation itself. However, most organisations tend to ignore or merely warn respective employees upon discovery of small value frauds (such as faking personal bills or fudging of expense reports). In the entertainment business for example, budget expenses for shooting and post production is where expense fudging  often takes place. Therefore, when employees collude with external parties to commit fraud (such as processing fake invoices submitted by vendors), organisations often tend to blame external parties first and not employees. This could be a possible reason for KPMG’s survey respondents to have ranked vendors/agents as the most likely to commit fraud against an organisation.
Among employees, senior management is considered the most susceptible to committing fraud by virtue of their ability to override existing controls. According to the ACFE 2012 Global Fraud Study (download it here), the position held by thefraudster within an organisation is directly related to the loss incurred on account of the fraud committed. Losses caused by senior management were approximately three times higher than the value of fraud loss due to managers; managers in turn caused losses approximately three times higher than junior employees.
In such circumstances it becomes imperative for organisations to provide a safe, robust channel for employees to report suspicions of malpractice. It is also important that an organisation’s Board comprise of individuals with utmost integrity who would engage themselves with the management. The Board needs to take a lead by setting the tone at the top and facilitate a zero tolerance approach towards fraud.

People are Essentially Good

However it must be remembered that the vast majority of employees are honest and hardworking. Unfortunately, it may only take one dishonest employee to put your business in serious trouble or even destroy it. The methods used are only limited by a dishonest employee’s creativity. Do not assume you can “profile” an employee thief.
Many frauds are perpetrated by long-term employees that no one ever thought could be involved in fraud. One of myfavorite fraud stories is about a parking lot outside Britain’s Bristol Zoo. Allegedly, for 25 years, 7 days a week, approximately $500 was collected in parking fees every day. The attendant never took a day off and then one day he did not show up for work. When the zoo called the city about a replacement, they were told he was not a city employee and the zoo was responsible.
The zoo was shocked that the attendant was not a city employee because he certainly was not a zoo employee! This is also a commonplace occurrence in Mumbai’s cities where fraudsters in the name of public parking in collusion with theBMC often extract parking fees to the tune of fifty rupees when the official fee for parking is only Rs. 5 or Rs. 10. It is another thing that even paying Rs. 50 is a helluva low amount for parking space in a space-crunched city like Mumbai where cars jostle with people and where footpaths are almost non-existent (I sincerely hope the BMC raises the car parking charges to Rs. 500 for an hour and trust me I wouldn’t mind paying it if it can discourage more people to walk more and drive less!)
Coming back to the Bristol Zoo case, at $500 a day, 7 days a week for 25 years, that equates to $4.6 million dollars earned by the fraudster! Although the veracity of this story has been challenged, the lesson to be learned rings true. Many times a fraud may be right under our nose and we may not see it! Be professionally skeptical, follow up on anomalies, and respect your instincts. I think we can broadly characterize most employee fraud into 10 categories. If you know what broad types of fraud schemes exist and have some basic knowledge of internal control, perhaps it can help you prevent employee fraud at your company.
I will provide the broad categories here and then briefly explore each of them in additional detail in later articles.
1. Poor Gate Security & Access & Exit Control
2. Fake Documents
3. Fake Vendors or Fake Employees
4. Misapplying Customer Remittances
5. Bribes, Bid-Rigging, and Kickbacks
6. Purchasing Goods for Personal Use with Company Funds
7. Data Manipulation
8. Fraudulent Expense Reports
9. Manipulate the Machines
10. Salami Fraud
Know that many controls are easy to establish while others may be too elaborate or expensive for your business. For smaller businesses, itis sometimes difficult to properly segregate duties for good internal control. Think hard about this because itis a major reason smaller businesses are hit so hard by employee fraud. Segregation of duties between employees having physical control of your assets and record-keeping for those assets is absolutely critical.
Regardless of the amount of time and money you spend, you will never be able to completely fraud-proof your company. Having said that, employee theft is a crime of opportunity. If you take small, simple steps, you can create a healthier internal control system and help discourage employee fraud at your company.