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Volume IX Issue 3 June


Published on

Money-laundering smut on banks refuses to subside as
Cobrapost ropes in further 10 more banks in its ambit
while RBI continues to stay on the fence. FINRA fines
firms “for failing to establish and implement adequate
anti-money laundering (AML) programs and other
supervisory systems to detect suspicious transactions”
While Phaneesh Murthy faces repeat charges of sexual
harassment at workplace, President Pranab Mukherjee
assents to the Sexual Harassment Bill making it into a
law covering the rights of domestic help and agricultural
labour of both organised & unorganised sectors.

Published in: Business
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Volume IX Issue 3 June

  1. 1. Money-laundering smut on banks refuses to subside as Cobrapost ropes in further 10 more banks in its ambit while RBI continues to stay on the fence. FINRA fines firms “for failing to establish and implement adequate anti-money laundering (AML) programs and other supervisory systems to detect suspicious transactions” While Phaneesh Murthy faces repeat charges of sexual harassment at workplace, President Pranab Mukherjee assents to the Sexual Harassment Bill making it into a law covering the rights of domestic help and agricultural labour of both organised & unorganised sectors. Matt Ferguson, CEO, CareerBuilder states “…a wrong decision regarding a hire can ……add up missed sales opportunities, strained client and employee relations, potential legal issues and resources to hire and train candidates…..” with data showing the percentage of wrong hiring which occurs in the top countries, with India ranking 4th. Best Practices shares comprehensive steps an organisation can take to ensure all gaps are covered. While the overall trend shows a dip in discrepancy percentage from the earlier two years, the trend needs to be watched in the present year and reasons analysed further. Monthly Newsletter Volume VIII Issue 3 Editorial Content 1. News 2. Legal Update 3. A Point to Ponder 4. Screening Trends 5. Best Practices in Screening 6. Case Studies 7. Products and Services
  2. 2. Stirrings within the Nation 10 More Banks Accused of Money Laundering Investigative website Cobrapost has released further secret tapes to show alleged money laundering by more banks. In the third part of its expose, Cobrapost claimed that it has recorded officials of Bank of India, Central Bank of India, Bank of Maharashtra, Allahabad Bank and Bank of Baroda, all major public sector banks, as well as IndusInd Bank, ING Vysya Bank, HDFC Bank, ICICI Bank and Axis Bank, among private sector banks. The bank officials were found to offer help to a corrupt politician to invest his black money into banking accounts and various insurance products. Cobrapost continued to claim that RBI is not doing its necessary bit. “The RBI continues to act as a protector, and not as a regulator or enforcer. The RBI is loathe to admit that there exists a massive money laundering racket in our financial institutions across the board, flourishing under its very nose, simply because if it were to admit to this deep-rooted malaise, it would strip the RBI of its halo as ‘one of the best banking regulators’ in the world,” Cobrapost said. RBI, on the other hand, said that it has completed investigations against the mentioned banks and will take action if they are found guilty of violating prudential banking norms. Phaneesh Murthy Sacked by iGate Post a Sexual harassment Complaint Outsourcing company iGate Corporation has sacked its chief executive officer and one of India’s best-known IT executives Phaneesh Murthy for not disclosing to the company his relationship with a subordinate employee. The board decided to sack him post a probe into a sexual harassment complaint against him. This is a second complaint of sexual harassment against Phaneesh Murthy. Earlier, he had lost his job with Infosys, India’s second largest software exporter, in 2002 following a sexual harassment lawsuit filed by his former secretary Reka Maximovitch. Infosys had paid $3 million to Maximovitch for an out-of-court settlement. Global Ripples FINRA Fines Three Firms for Not Establishing Supervisory Systems The Financial Industry Regulatory Authority (FINRA) has fined three firms a total of $900,000 for failing to establish and implement adequate anti-money laundering (AML) programs and other supervisory systems to detect suspicious transactions. FINRA also fined and suspended four executives involved. The three penalized firms Atlas One Financial Group, LLC, Florida; Firstrade Securities, Inc., New York; and World Trade Financial Corporation (WTF), California neither admitted nor denied the charges, but consented to the entry of FINRA’s findings. As per FINRA’s findings, Firstrade failed to implement an adequate AML program to detect and report suspicious transactions, including potential manipulative trading; Atlas One failed to identify suspicious account activity or did not adequately investigate numerous AML “red flags” between February 2007 and May 2011; WTF failed to create and enforce a supervisory system to monitor for unlawful transactions in unregistered penny stocks. The company also failed to comply with the Bank Secrecy Act. News 1 Continued...
  3. 3. 2 RDI Chief Guilty for Defrauding $2.1 million from Client Company Kevin Richard Halligen, ex-CEO of Red Defence International (RDI), a London-based security consulting and crisis management firm, pled guilty for executing a wire fraud. The federal charge stemmed from a scheme in which he defrauded $2.1 million from Trafigura Beheer BV, a Netherlands-based commodities trading company. Trafigura hired RDI as a consultant in crisis management after two Trafigura executives were captured and imprisoned in the Ivory Coast while visiting there for business purpose. While employed by Trafigura, he conned the company out of $2.1 million he claimed would be used to support his efforts to rescue them, but instead used the money to buy a six-bedroom mansion. Sexual Harassment Law Passed The bill addressing the issue of sexual harassment has been given assent by the President Pranab Mukherjee. The purview of the new law also includes the domestic workers and agriculture labour, both in organised and unorganised sectors. The act defines sexual harassment at workplace as well as lays down prevention guidelines and disciplinary action, if the act is violated. According to the act, sexual harassment includes any one or more of unwelcome acts or behaviour like physical contact and advances, a demand or request for sexual favours or making sexually coloured remarks or showing pornography. Non-compliance with the provisions of the act shall be punishable with a fine of up to Rs 50,000. The law lays down provisions for safeguard against false or malicious charges as well Legal Update
  4. 4. A Point to Ponder The Expensive Affair of Bad Hiring “Making a wrong decision regarding a hire can have several adverse consequences across an organization. When you add up missed sales opportunities, strained client and employee relations, potential legal issues and resources to hire and train candidates, the cost can be considerable. Employers are taking longer to extend offers post-recession as they assess whether a candidate really is the best fit for the job and their company culture.” Matt Ferguson CEO, CareerBuilder As per a survey conducted by CareerBuilder, more than half of employers in each of the ten largest world economies said that a bad hire has negatively impacted their business. Majority of employers in all top ten markets reported similar experiences. India comes fourth in wrong hiring choices made by companies. In India, the cost of a bad recruitment could be over Rs 20 lakh. Where does your company fit in- Among the ones busy hiring the mis-fits, or among the companies who are on-boarding the ideal ones? 3
  5. 5. Comparing the Discrepancy Trends for the last 3 years across Industry sectors, 2012-13 displays a dip after seeing a hike in the FY 2011-12. The reason for the decrease in the discrepancy could be attributed to significant decline in a particular Industry or industries [typically those that have made employee screening a consistent practice] or it could be attributed to economic health of the country. We will be sharing the analysis in our Annual Trend Report to be published in the QII and snippets in the forthcoming issues of the Newsletter. Keep watching this space for more insights on Screening in general and your Industry specifically. Screening Trends 4
  6. 6. Be Complete NAPBS advises to “conduct a comprehensive background search to avoid negligent hiring”. In this issue we discuss “Be Complete’ , one of the points which NAPBS thought as best practice, to understand the implications of not applying it. We understand what completeness means for the parameters we screen for. Identity How do you ensure the person is actually who they claim to be? • An existing employee uses her deceased sister’s identity…[Read Case Study] • A candidate uses his ex-supervisor’s identity …………….. [Read Case Study] • An individual requested self-verification for criminal records on what he claimed to be his possible adaptations of his name e.g Harbans Singh, Harbans Singh Kahlon, Hira Harbans Singh Kahlon. Verification of a Government-issued photo id is recommended Accessibility How do you ensure the person actually resided or resides at the address they claim to be residing at? • Outstationcandidatestypicallyhavecurrentaddressesaseitherguesthouses,hostelsorpayingguestaccommodation, • True on the date it was filled, the address may not be true on the date of verification [which maybe after 15 – 30 days depending on when it has been initiated etc.], the candidate having shifted since. While this scenario is not treated as a discrepancy; as a policy, organisations should then get the current address raised again and verified. Change of address of existing employees should be verified at random intervals Criminality How do you ensure the candidate is ‘crime-free’? Police Verification conducted without first validating the address at which it is being conducted is ineffective. If a person has never stayed at a particular address, the police verification if conducted there will always be clear! Ideally a combination of checks should be conducted: • Addresses candidate has resided at in the last few years [defined as per organisational policy for different roles] • Police verification at those addresses • Criminal Record Check done through databases • Media Check Fitment How do you ensure the candidate ‘fits’ the role you are hiring for? • By verifying base level education and/or relevant education & professional qualification/certification/license from the issuing authority? • By verifying professional experience with the organisation? • By verifying with supervisors regarding professional attitude & capability? • Verification is conducted on basis of what the candidate fills in the Background Verification Form; while the hiring team would have hired basis what was written in the CV / Resume. Validation of the Resume details with the stated facts in the form should be validated prior to initiating verification Best Practices in Screening 5
  7. 7. Verification of Certificates brings out Startling Facts Forty-eight mark-sheets and certificates that were apparently issued by the Maharaja Sayajirao University (MSU) to the students for successfully completing their academic courses, have been found to be bogus. Verification of the documents brought out the fact that they were not issued by the university and were forged. “The university has written to the consulates that these are not correct mark-sheets,” registrar Amit Dholakia said. A flag raised for both universities as well as companies. And a reminder that mass forging of certificates is generally carried out in conjunction with someone within the system. Hiring an individual with fake credentials is as much a threat to the company as letting a dishonest employee continue with their unscrupulous activities unhindered. The act of forging in itself is a clear indication of a person’s tendency to take the shorter route for getting the desired result. Background verification of new-hires and re-verification of existing ones are a tool to ensure that company is working with people with integrity at all times. Authenticated past and current antecedents as well as validated documents would equip the decision maker to take the right hiring decision with confidence. The Falsifications R Bhavani Sankar, along with his wife and two other accomplices, was arrested on the charges of duping Emami Realty, a Kolkata-based realty firm, for about Rs.9 crores. According to police, the accused forged documents and entered into an agreement with the firm in 2006. They had claimed 5.8 acres of Poramboke land along Avinashi Road is owned by them, which in reality is a government land. A deal worth of crores on a foundation of invalid promises. A set of forged documents taken on face value. Was the fraud avoidable? Were there ways Emami realty could have saved itself from this fraud? Should documents presented by a party be taken on face value? Deal requires investments which can turn into losses of not done cautiously. Investment risk is not only about monetary returns within a stipulated period but also encompasses the parties involved in the agreement. Wrong selection of investee can again result in losses for the investment maker, just like the case with Emami Realty. Selection of investee can be right when such selection is backed by verified facts. A check into organisation’s registry records, financial reports, regulatory and compliance history as well as market reputation aides in zeroing on the genuine investee. Verification can be rendered useful and comprehensive when it is complete with a check into authenticity of all the documents presented by the investee. Case Study 6
  8. 8. AuthBridge Research Services Pvt. Ltd. Plot No. 123, II Floor, Udyog Vihar, Phase IV – Gurgaon – 122 016 , Haryana, India Sales Enquiries: E-mail: Tel: +91 – 8826988001 DesignbyHuesTechnoloies Risk Assessment Services All investments involve risks, and such risks go beyond the purview of vanilla employee screening solutions. Financial dealings, corporate partnerships and political leanings undertaken to further business’ interests are some probable risks. Risks associated with sources of finance, probable business partners’ reputation and credibility are few aspects that a company should look into before going ahead. AuthBridge’s risk assessment services verify and validate investment opportunity as safe and compliant. Adherence to compliance and security standards post the investment is another aspect that is taken care of by our services. AuthXtendTM Stay Screened, Always! – AuthXtend ensures compliance to organisational background verification policy by periodically verifying criminal records and current address verification. Periodic verification ensures any negative development on the employee post on-boarding is brought to the notice of the organisation. AuthXtend is an effective solution to mitigate risks from an existing employee’s change of approach by changing his or her current address and not keeping the organisation informed. A criminal activity post hiring may go unnoticed unless periodic verification is done. Product and Services