Time bomb is ticking, top fraud investigator warns

Staff Writer | Friday June 1, 2012 00:00

Elliot Luka, one of an elite group of certified fraud examiners in Botswana, told Business Week that various manifestations of fraud were appearing in increasing sectors of the economy. According to Luka, one of the prevalent frauds, known as land flips, is related to the proliferation of bogus property and real estate agents.

'We have heard cases where someone would say 'here's my empty house and I'm the owner or agent,' and even have the keys and demand a deposit,' he said in a recent interview. 'The real owner then pitches up to say 'that's my house.' I have come upon these cases and they are really very serious.' Even with legislation, the Real Estate Institute of Botswana, is battling to stamp out bogus agents who are seeing opportunities in the extreme accommodation supply/demand gap in most urban areas. Luka added that besides 'land flips,' 'diploma mills' were also an emerging type of fraud in the country. In this instance, he said, the fraud involved unethical private education institutions offering unrecognised and unqualified courses to unsuspecting learners.

'Government wants to help students and we have a lot of institutions coming in with qualifications that some of these students find themselves stuck with,' he said. 'That's another serious up and coming fraud. Look at how it's done at the UB; they don't have a fixed intake and it fluctuates. But these other institutions, it's 100 every year and you ask where these students are going. 'It's not just affecting people coming out of form five, but also working people obtaining qualifications through the Internet.'

Luka has also written on the emergence of identity theft in the country, in the Botswana Institute of Accountants newsletters.  He told Busines Week that in this particular type of fraud, the potential for harm to the victim is enormous and prolonged.

'There's enormous potential for damage if someone has your Omang. If someone has your Omang, they become you,' he said. 'That criminal can go to a cash loan or bank and open an account, start depositing big money for even up to two years to gain the bank's faith, then ask for a huge loan or credit card and disappear.

'That's when the bank will investigate and end up coming back to you, the victim. 'Hard-core criminals on the run need to change their identity and their best source is identity theft.' Luka said it appeared some members of the public were generally lax in handling their Omang.

'Maybe there's weak education of the value of this card or perhaps people get them when they are young (and grow too accustomed to poor handling),' he said. 'Shops also don't know what to do when someone forgets their Omang and they just hang it somewhere.'

The fraud sleuth said combating fraud required concerted education of all stakeholders on the broad types of fraud, its prevalence and its impact on the economy.  He stressed the importance of whistle-blowing policies and hotlines in organisations that allow workers to report fraud anonymously.

'Studies show that most fraud is not discovered by external or internal auditors, but rather by tips,' he said. 'There must be that policy to protect anonymous callers. Internal auditors are also helpful and in this, the most important aspect is that there should be surprise checks.

'At national level, people must be educated at passport and Omang offices that there are consequences to losing these documents.'