Wednesday, August 22, 2007


DETECTION and control of fraud and corruption must start from the highest echelons if the trickle down effect is to be felt, says Rosa Langi, believed to be Fiji's only certified fraud investigator and forensics accountant.
In her view, the Fiji Independent Commission Against Corruption's tactics in dealing with white collar crime are peripheral and fail to address the biggest and most widespread white collar crime known as financial statement fraud.
She explains this as she speaks candidly to FREDERICA ELBOURNE about raising the red flag, and the fear that FICAC itself may commit fraud because of the pressure it is under.
FT: Your qualifications and experience speak volumes of your understanding and perception of the problem of white collar crime and fraud or corruption as most call it here. In the face of growing concern over how wide spread this practice is in the civil service and in light of the work and role of FICAC, can you explain what you think should be the proper way for FICAC to proceed under the circumstances in successfully undertaking its role to fully meet its goals?
Langi: I worked at FIRCA in 1996 where I came across a lot of white collar crimes. It was where taxpayers tried to make deals with you. After working in the Prime Minister's office in 1997 I worked for the Fiji Intelligence Service where we focused on white collar crime a lot of it and investigations we came across included the covert underhand kind of service.
In 1999, they sent me to the Major Fraud Unit in Nabua for a few months and I was asked to go to Finance because of the concerns of the Y2K problem. Turned out the Y2K was fraud. There was some politics with my posting as private secretary to the Finance Minister then so I was sent to police head quarters. I was there from June to December doing literally nothing because police were busy with law and order and civil issues. I was paid to do nothing much. So I started asking myself questions and PSC and I wasn't the only one there were a few of us that were just mucking around because there was nothing to do. The AUSAid funding was removed and there was a worry about things to happen, so I quit at the end of 2000 and went back to FIT to teach auditing tax until 2004.
The FIT problem is history now but when I was there I was one of those forever bringing up the issue of corruption. There were issues of lack of transparency. For example, as head of accounting, the Budget was something that very few had access to. There was no transparency, lacked accountability and that continued from 2001 to 2004. In the meantime, I had become a member of the Association of Certified Fraud Examiners the only institution of its kind in the world today.
The deal with FIT before I quit in 2004 was for them to allow me leave without pay to complete my PhD in the US. I mentioned specifically that the PhD was to do with fraud and that this would be the first time in Fiji for someone to study fraud. This was leave without pay which I explained was for an area that would be huge in the future. University of Texas is where the Association of Certified Tax Fraud is and it was where I was going. FIT replied that if it was more than one year, then I would have to resign. So I quit, gladly.
Later, I was to go away, but somehow I met the University of Fiji people at that time because they had just started so they asked me to coordinate the accounting department and prepare programs.
It was supposed to be a six month contract but I ended later in June last year in fact. I left Fiji and joined the University of Wollongong in 2006 where I did my Masters in forensics. The University of Wollongong is the only university in the world that offers Masters in forensics in accounting.
I'm also completing my Masters in fraud investigations which Charles Sturt University offers. It's done on line. This was part time, while Wollongong was full time.
FT: Why the interest in this field? Are you the only locally certified one? Do you know of any other locals in the same profession here? What about FICAC?
LANGI: In fact I think I am the only one locally with this much experience and qualifications in Fiji. There may be some overseas people here but I am the only local. Being an accountant I went to FIS and then moved on to intelligence and then with VAT Income Tax experience.
What FICAC is doing is just the tip of the iceberg. FICAC is a reactive unit, meaning the fraud happened elsewhere and FICAC is investigating. Fraud is not happening in FICAC, it's happening in the government ministries and departments.
FT: So what you're saying is FICAC is not serving its full purpose?
LANGI: What I'm saying is nothing is happening in FICAC. It is timely, but a short term solution. At the same time they need to realize that what they need to do is all the ministries need to understand this trend and crime, otherwise FICAC will keep increasing.
To detect and prevent fraud is the solution. It's proactive. It's what needs to happen. It needs to start first and foremost in the ministries and departments, from the top to the bottom. I need to speak to each one of them in the ministry and department about it. We haven't even tapped into the private industry and statutory bodies. What interested me with FICAC were the jobs recently advertised. The bigger the organisation doesn't necessarily mean it will achieve its aims and goals faster. It's a reactive unit after all, just like the police. The unit detects fraud and the police come running.
The code of conduct is for those at the top. It has all this jargon about transparency, accountability. Do these people know what they're talking about? They can bring the most experienced forensic accountant in. It does not solve the problem because the problem stems from the ministries. So while the investigations are going on at FICAC, the corruption and fraud continues in the ministries.
FT: There are mechanisms and systems in place to detect and control. Why not strengthen it?
LANGI: No. Internal control will not work. The civil service reform will not work.
FT: What gives rise to fraud and corruption?
LANGI: Fraud and corruption happens for three reasons or in three situations and these happen simultaneously. They can not happen in isolation. One is pressure. Last night on television, there was a church minister saying something about tithe and its obligations and how it did not pressure people to give soli. He does not realise that indirectly, it leads people to corruption. These people do not know what they're talking about. One of the reasons for corruption is pressure which comes in many forms. Finance is the main one, and work pressure is the other. The teachers and nurses have just returned from strike. This is a result of pressure and unhappiness at work which is called employment deviance.
You are not happy, and you think you deserve better rewards to earn more. I never go to CWM anymore. These nurses want more, but what guarantee is there that when you give them more it will improve their work?
You see your boss going off to the west on a corporate jaunt and you think I deserve that too. The Methodists are pressured to produce a lot more than they can give.
FT: On account of having tea and tavioka at home as a sacrifice?
LANGI: Exactly. The second reason for fraud is opportunity. An example I have a financial problem, I am a cashier, I have access to money. But you don't have to be a cashier, but as an auditor in direct contact with the business people you are most likely going to strike deals.
Rationalisation is the third reason. It is something like "I am a religious person and I have faith in God and he will pardon me if I borrow this money but don't pay it back because I am giving it to the church. It is self justification. It is where you excuse your own wrong actions because God will pardon you. It is where they see stealing as borrowing and is something cashiers do.
This is where the red flag comes in. These people are the ones that must turn up to work every day. Because A is borrowing from B to pay C and C is borrowing from B to pay A. So you need to be there all the time to collect these different transactions.
Financial pressure is huge. The Fijian traditional system indirectly places huge pressure on the solis and ogas. Directly and more commonly is where people are promoted and they don't have what it takes. FICAC is not qualified and there is a lot of pressure. Their work is secretive. There is the opportunity there for rationalisation so the quicker they get qualified people in there, the better, otherwise you have FICAC committing fraud as well because of the situation. It has been tested overseas that pressure in any form gives way to fraud.