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Sunday, March 26, 2017

Anomoly? Or Fraud?

An anomaly is an abnormality, a blip on the screen of life that doesn’t fit with the rest of the pattern. If you are a breeder of black dogs and one puppy comes out pink, that puppy is an anomaly. The noun anomaly comes from the Greek word anomolia, meaning "uneven” or “irregular.” When something is unusual compared to similar things around it, it’s the anomaly.

Fraud is the "wrongful or criminal deception intended to result in financial or personal gain.
"he was convicted of fraud"
synonyms: fraudulence, cheating, swindling, embezzlement, deceit, deception, double-dealing, chicanery, sharp practice.
"he was arrested for fraud"
swindle, racket, deception, trick, cheat, hoax;
informal scam, con, rip-off, sting, gyp, fiddle, bunco, hustle;
a person or thing intended to deceive others, typically by unjustifiably 
claiming or being credited with accomplishments or qualities.
synonyms: impostor, fake, sham, charlatan, quack

Ex-Palawan gov Reyes, 41 others charged in P1.53-B Malampaya scam
MANILA — Former Palawan Governor Mario Joel Reyes and 41 others have been charged at the Sandiganbayan for anomalies in 209 contracts funded by P1.53 billion in royalties from the Malampaya gas field in 2008 and 2009.

The Office of the Deputy Ombudsman for Luzon filed 159 criminal charges, totaling 491 pages, for alleged procurement violations by the provincial government led by Reyes. State prosecutors also alleged that the engineering office faked the accomplishment and inspection reports and allowed the violation of the terms for 39 infrastructure contracts worth P461.37 million.

These projects from across the island province—which included roadworks, schools, day care centers, and even an airport development project in San Vicente town—were actually unfinished at the time when these were certified as completed in 2008 and 2009. Add to these the contracts with disadvantageous provisions, a total of 54 projects were singled out as riddled with irregularities

Prosecutors said Reyes conspired with seven other officials to award the 209 contractors to 11 construction firms sometime in 2008, despite the violation of several requirements under the Government Procurement Reform Act. These included the failure to post the bid invitation online at the Government Electronic Procurement System and the province’s website, and the non-submission of bidding documents.

Likewise, the infrastructure contracts were found not to contain a clause for the payment of liquidated damages in case of project delay.

There was also improper evaluation of bid proposals as one set of key personnel was allowed to supervise construction work in different municipal projects with overlapping timetables. This violated the rule that evaluators must stay in the job site and handle only one contract at a time, the charge sheet read.

Due to these alleged irregularities, Reyes was charged with 14 counts of violating Section 3(e) of the Anti-Graft and Corrupt Practices Act for causing undue injury to the government and 22 counts of violating Section 3(g) of the same law for entering into disadvantageous contracts.

Reyes was also accused, along with provincial accountant Orlando Colobong and provincial legal officer Elena Melchor Vergara-Rodriguez, of approving the payments to three contractors despite incomplete supporting documents.

Reyes was not involved in most of the 159 charges, which are related to the provincial engineering office’s alleged offenses regarding 39 individual contracts. Provincial engineer Charlie Factor has been charged with 50 counts of violating Section 3(e) of the graft law, 76 counts of falsification, and seven counts of violating Section 2 of Presidential Decree No. 1759, which penalizes violations of material provisions in government contracts.

Factor, Padua, Abrina, and Cabuigen, as well as assistant provincial engineer Federico Rubio Jr. and 10 resident engineers were accused of causing the government a total of P169.71 million in damages for faking the accomplishment reports to justify the payment for 39 unfinished projects priced at P461.37 million.

Egregious discrepancies allegedly attended seven of these projects, which were barely half-completed. A supposedly 100-percent completed road widening project in Coron, for one, turned out to be 13.81-percent finished only.

At the same time, state auditor Edwin Iglesia and senior technical audit specialist Ronelo del Socorro of the Commission on Audit regional office were slapped with one count each of graft, falsification, and violation of PD 1759.

Their charges pertained to the allegedly fabricated CoA inspection report for the San Vicente Airport Development Project dated Sept. 11, 2009. They stated that the project was 58.36 percent complete during ocular inspection, when it was only 8.8 percent finished.

Private individuals from inside and outside Palawan contractors were also charged.
Corruption and fraud are engineered by anomalies and irregularities.

The Six Signs of Internal Fraud
As executives, managers, internal auditors or rank and file employees, when it comes to internal fraud we may suspect it, suffer the consequences of it, or anticipate it. But we never see it, according to Steven Albrecht, associate dean at Brigham Young University's Marriott School of Management.

However, we can see the signs of fraud, Albrecht said in a speech at the 18th Annual ACFE Fraud Conference. There are six signs in all organizations. By understanding them and looking for them, we significantly improve our chances of detecting and reporting fraud.
Accounting anomalies—representing such countless red flags as inventory shortages, unrecorded transactions, unusual levels of returns, etc.

Internal control weaknesses. These equate to opportunities for insiders to commit fraud. If you identify a weakness, chances are that someone will exploit it if they haven’t already.

Analytical symptoms. When a business function occurs at the wrong time, or is conducted by the wrong person or a similar operational anomaly occurs, chances are it is a sign of fraud.

Lifestyle symptoms. Employees living beyond their means is the most common. Smart internal fraudsters would steal and save. But most steal and spend. When you notice signs of extravagant lifestyle, you’re most likely looking at a sign of fraud.

Behavioral symptoms. People who stop looking you in the eye, sweat more than usual, come in earlier than usual and/or stay late should be monitored as potential fraudsters.

Tips and complaints. When employees report actual or suspected incidents of fraud among their co-workers or bosses, you’ve got good reason to start following up with a search for hard evidence.
Look for the anomaly to find fraud
Businesses have spent megabucks on detection systems and controls to prevent fraud — and yet fraud still occurs. There are ways, however, that all individuals and businesses can recognize fraud.

People ask me continuously, “How do you find fraud?” The answer is simple: You look for the anomaly! I mean, look for the unusual. You must look for the anomaly, recognize it and not ignore it. In hindsight, people will tell you they saw the signs of their kids or spouse using drugs, but they ignored it.
There is actually a huge industry and body of knowledge built up around the detection of fraud through the careful collection and sifting of data, looking first for anomalies, things out of place. But mere deviation is not fraud.  Fraud is intentional deviation designed to unfairly or illegally dispossess someone of their property. 

But in cases like that reported here, when anomaly has been rendered the norm and in large proportions, which if proven would be an epic of collusion and corruption, all you need is to simply open your eyes to link anomaly to fraud and corruption. Here, no one, it appears, was prepared to do that, given that these deeds were done many years ago, and are only being exposed now.

Of course, crimes are not presumed and persons charged with crimes are innocent until proven guilty.  But, in some cases, "anomaly" or "irregularity" is simply a polite, legally judicious, and imprecise, way of saying "fraud" or "corruption".

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