UAE: How a forensic investigator helped solve a mysterious case of forgery

Majority of the forensic specialists in the UAE are equipped to deal with accounting fraud and embezzlement challenges

Khalid Farooq. — Supplied photo
Khalid Farooq. — Supplied photo

Waheed Abbas

Published: Mon 13 Mar 2023, 6:00 AM

Last updated: Wed 15 Mar 2023, 4:43 PM

Khalid Farooq was instrumental in solving some of the most complicated and mysterious cases in the UAE, including one related to the forgery and fabrication of invoices and fees relating to shipping and storage fees.

Farooq, partner, risk and forensic services at BDO UAE, one of the world’s largest auditing and accounting firms, has called on investigators that they should make sure they have carried out the investigations to the best of their abilities.

Farooq shared details of the case, saying that out of the seven accused, six individuals confessed to forging the documents and benefitted by waiving off fees and pocketing the fee amount. But the seventh individual’s credentials were used without his knowledge to complete transactions.

After searching for a few months, Farooq revealed that the public relation officer (PRO) of the company who had made the payment of the fees relating to this particular transaction confirmed that the seventh individual accused in the case was not the person he paid the money to as he regularly visited to pay the fees for storage and shipping.

“I showed him pictures of the people who were usually dealing with such transactions. He was able to identify the person who turned out to be the supervisor of the accused. He also mentioned that the same supervisor approached him and told him not to mention anything to the investigators to avoid getting into trouble. We called the supervisor in and he confessed to his wrongdoing and we were able to get the seventh individual released from authorities,” he told Khaleej Times in an interview.

Established in 1963, BDO is the fifth-largest firm in the world in audit, accountancy and advisory services. It started operations in the UAE in 1975. As part of its Emiratisation programme in line with the government initiative, it has brought on board Emiratis at the senior level, including Khalid Farooq.

Be it fraud, financial forensic reviews or cyber forensic investigations, BDO has solved highly complex cases in the UAE and the Middle East.

Organisation structures

Farooq added that the majority of the forensic specialists in the UAE are equipped to deal with accounting fraud and embezzlement challenges.

However, structures are wrongly placed within some organisations where some finance professionals do everything because they don’t even have a proper audit department.

“Companies are more than capable to deal with fraud and embezzlement cases. However, they need the right skillset because the audit is different from investigation and people need a different mindset and approach,” Farooq told Khaleej Times in an interview.

He stressed that many companies make this mistake as they are two different skill sets and shouldn’t be mixed.

Internal auditors for investigation

Farooq pointed out that firms try to cut costs by asking internal auditors to carry out the entire procedure, even those that are beyond their scope.

“For instance they make them do quality assurance, risk management and compliance, investigations, special reviews in addition to their audits.”

Some entities make finance managers audit to cut costs and internal auditors report to the general manager or CEO. This is believed to be a serious issue from a governance perspective. Internal audits should maintain their independence by reporting to the audit committee or the board. Therefore, culture should be set on the top and minimise overriding of controls and abuse within the organisation.

He advised that professional services should be carefully selected to do work that has the right expertise as a well-constructed case based on factual evidence has a higher chance of success.

“But one thing should be understood that a good investigator and lawyer may be able to construct and build up a good case that may seem weak. On the other hand, a strong case may be ruined and dismissed due to the lack of experience of someone that doesn’t have the right expertise. Companies shouldn’t just look at cost reduction because they may end up paying a much higher cost in the end.”

“The process of fraud and forensic investigation is more reactive in nature than proactive, hence, it makes more sense to engage a specialist and not try to do internal investigations as this is a very specialized field. It is essential that doing things right from the beginning is always best for the organisation.”

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