Please, read the article, create a main post about the questions below and respond to two classmates. I have attached the articleand classmates posts. Thank you.
Read the article:
They stole food from the mouths of babes
Discuss the implications or potential implications for the fraud. Include as part of your discussion response: the type of fraud as well as the impact it will have on future international humanitarian efforts from these events.
Apply the Saint Leo core value of Integrity to the implied fraud in this case study. Why would it be more or less important in this humanitarian case?
Module5_Case Study They stole food from the mouths of babes Examining humanitarian aid fraud in developing countries CATHERINE COLE, CFE January/February 2013 HÅVARD SÆBØ, POCO_BW, PEETERV/ISTOCKPHOTO Two employees of a U.S. government-funded relief project in Liberia, Africa, were convicted of diverting US$1.9 million in food and tools from thousands of hungry and needy families. The author describes her fraud examination work on the case and provides tips on working in Africa. Liberia in the early 2000s: This West African nation — recovering from the rule of Charles Taylor and a brutal 14-year civil war — was under a transitional government. Displaced people were returning to their battered communities. Clinics, schools, wells, latrines, bridges and roads needed repair. Good jobs were scarce. At the end of 2003, unemployment and illiteracy stood at more than 75 percent. This fragile context bred a "grab what you can" mentality to survive and support extended family members. In 2005, the U.S. Agency for International Development (USAID) funded more than $2 million in food commodities to a large international humanitarian organization — for a Community Resettlement and Rehabilitation Program in Liberia. The grant provided vital nutrition — legumes, vegetable oil, grains — in return for beneficiary labor on desperately needed post-war infrastructure projects. At the end of the two-year grant, the national director and head of programs received an anonymous text message reporting that employees had diverted food and tools from hungry and needy families. Eventually, two Liberian defendants —salaried managers of the program — were accused and convicted of a US$1.9 million fraud in a country that had a real per capita GDP in 2009 of $128. The fraudsters stole food from the most vulnerable of the vulnerable — many of whom were young, frightened mothers with babies in impoverished, rural areas. At the time I was director of financial and strategic planning for the humanitarian organization. The organization sent me to Liberia — primarily because of my West African audit background — in February and August of 2008 to review a previous internal audit and gather additional information. My division's responsibility was to respond to U.S. authorities, calculate and report final losses and ultimately repay USAID. In this article, I describe my fraud examination and tips on investigating amidst the challenging conditions in African countries. Humanitarian aid is a multibillion-dollar industry providing basic economic, health, infrastructure and food security to those in need. Many of the countries that receive this aid have contextually challenging business environments. For example, Transparency International's 2005 Corruption Perceptions Index ranked Liberia, West Africa, 137 out of 158 countries for levels of corruption. Conducting a successful fraud examination requires a basic understanding of the unique environmental and cultural issues on the ground. FRAUDSTERS FALSIFIED DOCUMENTATION WELL We knew from the internal audit that in the midst of an incredibly tough operating environment, management-level employees had committed occupational fraud by diverting food intended for hungry Liberians and covering it up by directing subordinates to falsify corresponding documents. The fraudsters then sold this food on local markets for personal gain. The "distributions" appeared legitimate to those monitoring the project because of fraudulently signed waybills and falsified beneficiary receipt documentation. The audit process could only verify that 9 percent of the commodities had been distributed to the intended beneficiaries. Many of the corresponding infrastructure projects remained incomplete. With the possibility that up to 91 percent of the food intended for hungry people was diverted (though the audit couldn't confirm this), we conducted additional probes, including a contractually required review from a supervising organization on the ground in Liberia. By the time we discovered the magnitude of the fraud, the grant was completed; most employees had fulfilled their terms of service, and we weren't able to reach them. Gathering evidence in the African bush can be harrowing. It was difficult for us to uncover additional details and determine final losses. Because the fraudsters falsified documentation so well, we had to reconstruct events from staff's and beneficiaries' oral reports. Closing "feedback loops" (that is, discovering who received what food and tools and how it was distributed) with staff and beneficiaries in Liberia required extremely complicated travel. Many intended beneficiaries lived in remote areas, and it took days of traveling washed-out roads to reach just a few. (See photo at left.) Unlike organizations in Western society, these people didn't have a ready way to connect to let us know their customer experiences. We had to carefully consider the motivations of both beneficiaries and former staff. Beneficiaries may have been motivated to inflate losses so they could receive more food. Staff may have been under other pressures or threats that outsiders couldn't easily detect or understand. Conducting fraud examinations in Africa poses cultural challenges. Africans' notion of time often is different from Westerners. (For example, one former Burkinabe colleague was unsure of his birth date, so he was never able to report his accurate age.) All the intended Liberian beneficiaries lived in remote villages without standard working hours, calendars or electricity. Seasons are limited to "dry" and "rainy." To complicate matters further, we were interviewing beneficiaries about events that took place years earlier. Tribal alliances are another potential complication. In Western society, nepotism is addressed through human resources' departments, general hiring practices and policy. Alliances might be more pervasive, yet subtle, in many African societies. In Liberia, employees alleged both the head of the local operation and the fraudsters were members of the Vai tribe. As news of the potential fraud spread, we had difficulties securing all original documentation. Remaining documentation had been moved and placed in an unsecured, temporary, unlit storage unit in front of the main office building. We had to dig for days through red-dust-covered commodity documentation in hot, uncomfortable conditions. During our examination of falsified beneficiary receipt documentation we had to discern between true town names, false "ghost" towns and those with varying spellings — a common characteristic among traditional African-named communities. (See the chart below.) We originally thought four towns were fictitious, but then we discovered their actual names by visiting them and verifying food distributions. Those without experience on the continent should be cautious. Expatriate staff who were asking too many probing questions in other African cases sometimes would find fresh animal parts placed on their desks as warnings during fraud probes. As an American woman, I often felt unwelcome in previous audits. SUGGESTIONS FOR MANAGING POTENTIAL BARRIERS I supported the local operation through its contractually required review by briefing senior management, obtaining physical copies of much of the documentation (commodity waybills, contracts, internal and external distribution reports, etc.), and finding legitimate communities previously identified as "ghost" towns, all of which reduced our financial liability to the donor. Afterwards, I arranged for additional key documents to be shipped and securely stored in the U.S., calculated and reported final losses to the donor and authorities, provided ongoing briefings to senior management and various departments such as legal and media, and provided information to a U.S. Attorney's Office. I learned many lessons from this fraud examination and previous audits in Morocco, Sierra Leone, Burkina Faso, Malawi, Ethiopia, Rwanda, Sudan (before the establishment of South Sudan), Kenya and Ghana. Lesson No. 1: Cultural issues can be significant I found it difficult to close "feedback loops" because most of the potential interviewees were in remote areas. If you ever find yourself in the midst of a fraud examination in an African country, children will most likely gather around to get a look at you when you first reach the interview site. Don't ignore them; ask them to sing a song, and you can clap and smile while you listen. You'll begin to build a rapport with them and their parents. Seek the permission of the village chief or leader before you conduct any interviews. Be patient; it once took me three hours to find the leader during an investigation in Ghana. (If the chief doesn't give you permission, leave the village.) Demonstrate respect to the chief by shaking hands (lightly — most Africans consider a firm handshake insulting) and taking the time to engage in culturally appropriate introductions. Tell him about your family and ask about his. You may be asked to share a meal with him and others. Don't wear your watch, and don't check the time on your cell phone or rush the process in any way. Most rural Africans (indeed, most non-Western countries) don't appreciate the Western notion of time. Rushing through the process can be insulting. I didn't face this in the Liberia examination, but I've often had to hurdle the language barrier. Of course, oral reports become more complicated when interviewers don't speak the local language or dialect. In some African countries, people living in remote areas may only speak an indigenous language understood by a very few people. Obviously, you'll have to find the best translator you can. One trick I used in rural Ethiopia was to call out to the ever-present crowd around me to ask for someone who speaks English. Often, someone's niece or grandchild would volunteer. This may reduce dependence on an assigned translator who actually might not totally understand the unique village dialect or have a motivation other than uncovering the full truth. If you assume any authority over interviewees or volunteer translators, you'll decrease your chances of receiving authentic answers. To build rapport, share bottled sodas with interviewees, which most perceive as a gracious gesture and great treat. Sitting in a circle under a tree, drinking sodas, creates an open