FOR MANY PEOPLE, fraud is something you see in the movies or read about in crime novels. But with the recent corporate scandals involving the likes of Enron, WorldCom and Tyco International, and closer to home, the Bank of China and China Aviation Oil (Singapore), it would seem that white-collar crime is now very common. Enter the fraud investigators. To the layman, they simply dismantle a case, put it back together and, somewhere in the process, discover the culprits and bring them to justice. This is an oversimplification of a crime sector that can be extremely complex, and requires a great deal of time and effort in investigations. Fraud investigators must have a unique set of skills, chiefly acquired through experience. They do not have to possess a law enforcement background, although that would be an advantage. The industry is open to a wide range of professional expertise - banking, accountancy, law and computer forensics. Because fraud is typically discovered only after it has been committed and the culprits have fled, it requires a team of investigators specialising in different aspects of the crime to reconstruct it and uncover what has taken place. 'You need a team to rebuild what has occurred and look at the processes,' said John McFarland, senior vice-president, business intelligence and integrity risk division, Hill & Associates. This could involve accountants probing into how the fraud was committed, computer forensic specialists retrieving lost data that could be used in evidence, consultants who fulfil a project management role and, of course, the fraud investigator who asks questions at the scene of the crime. A fraud investigator must have 'an inquiring mind, analytical skills, be a good communicator, and be able to put himself in the position of a fraudster so they can more easily create what has happened before', Mr McFarland said. Steve Vickers, president and chief executive of International Risk, agreed. 'Development of a chronology of events, commencing well before the apparent incident, is generally a very worthwhile exercise,' he said. 'In many cases, fraud starts or is planned far in advance of the actual event, and evidence - footprints in the sand - can often be found by searching months before an incident,' he said. While no specific qualification is needed to be an investigator, many of Hill and Associates' senior management officers in its business intelligence and integrity risk team are certified fraud examiners with the globally recognised Association of Certified Fraud Examiners in the United States. The self-study course focuses on four key areas: financial transactions, investigation, law and criminology. The course gives a comprehensive picture of what fraud investigators should know, including understanding how fraud is committed and how it can be identified; examining books and records to detect and trace fraudulent transactions; interviewing suspects to obtain information and confessions; writing investigation reports; advising clients on their findings; testifying at trial; being well versed in law as it relates to fraud and fraud investigations; and understanding the underlying factors that motivate individuals to commit fraud. The hours or days immediately following the crime are crucial to the development of the investigation. 'Companies should bring in investigation teams as soon as possible,' said John Flannery, managing director at Kroll Hong Kong, an independent risk consulting company. 'If you leave it, the evidence may be lost or obliterated over time, and individual memories could become blurred.' The hardest types of fraud to investigate are usually in companies that lack clear guidelines or definitions of roles and processes, with no clear line of delegation or segregation of duties, and no benchmark by which to measure the conduct of employees. While security and risk management consultancies obtain their business by referral or word of mouth, their work can be frustrating because of the confidentiality involved. 'One of the greatest battles is corporate confidentiality,' Mr McFarland said. 'Companies don't want to talk about what has happened, so we can't give early warning to other people of a particular scam or fraud. 'Often, if a fraudster doesn't get caught, he will move on to other vulnerable companies. It is like a computer virus. By the time people have figured out what has been going on, it may have been done three or four times already.' Fraud can be extremely well hidden behind a mountain of information, adding to its complexity and scale. That is why investigations cannot be carried out by a single investigator. Investigations require the support of technology, special multi-platform software designed for graphical analysis, data retrieval, document recreation, and audits. Most types of fraud these days are carried out by company insiders, including senior employees and even directors, working in collusion with colleagues or other external suppliers and vendors to get kickbacks, bogus expenses or commissions. 'Their activities can go undetected for months or years because firms have neglected to establish basic fraud prevention and risk mitigation measures,' Mr Vickers said. Other types of fraud include money laundering, and maritime and insurance fraud. Proper and ethical company disclosures at initial public offerings are also a concern. Fraud is not always about getting money. It could involve obtaining information as well, given that about 95 per cent of corporate information is now stored as electronic data. To combat this trend, Hill and Associates has developed an information assurance solution, which helps companies develop a framework to safeguard its information on an ongoing basis, so that any vulnerability in the corporate information system can be identified and fixed before it can be exploited by a fraudster. A key responsibility of a fraud investigator is to help devise prevention strategies, understand fraud risk, and stay on top of the latest scams taking place. In Hong Kong, one way to get into fraud investigation is to first join the police force. The Commercial Crime Bureau, the centre of complex investigations involving fraud, computer crime, counterfeiting and forgery, does not recruit investigators from outside. All of the bureau's investigators are drawn from a pool of police officers, with new recruits taken on regularly. These officers are trained in general investigating skills at the Police Training School. The force also offers a commercial crime investigation course and on-the-job training to investigators. 'The demand for trained fraud investigators will continue to rise as we see more complex fraud cases globally,' Mr McFarland said. 'The inability of law enforcement agencies to respond to all cases because of other priorities, will also mean an increase in instances where companies will initially have to deal with fraud cases themselves.'