Case Studies

Cerebra identified the misconduct of a senior executive, leading to the recovery of USD 12 million worth of stolen assets

SITUATION 

A family-owned company, ranked among Turkey’s top 100 industrial firms, reached out to Cerebra. The company’s shareholders suspected that the senior executive in charge of international sales was involved in fraudulent activities related to discounts on significant transactions and requested Cerebra to investigate these suspicions. 

OUR SOLUTION   

Project-specific considerations  

On the first business day following the signing of the contract with our client, our team, consisting of three fraud investigation experts and one digital forensics expert, commenced on-site investigation activities. 

On the first day of our project, the primary concern was preserving the digital evidence on the suspect’s company computer and mobile phone. Our fraud investigation team guided the company’s board of directors and their attorney correctly, ensuring that the computer and mobile phone were obtained with the suspect’s consent. 

Our forensic experts promptly created forensic images of the suspect’s computer and mobile phone. We then returned the computer and phone to the suspect.  

In the first week of our project, we gathered all critical financial and operational data and conducted face-to-face meetings with the management, legal department, and process owners. 

In our initial assessments, we identified the following challenges related to the environment in which the suspicious transactions occurred: 

  • The boundaries of authority and responsibility for the suspect were unclear. The low level of institutionalization and weak internal controls resulted in high fraud risks. 
  • There were many familial connections within the company. The suspect was a relative of the company shareholders. 
  • Some processes were being conducted through unofficial communication via WhatsApp. 
  • There were doubts about the reliability and integrity of the financial records related to suspicious sales transactions. 
  • Only the suspect handled the communication with the customer who was suspected of having a secret collaboration with him. 
  • Unit prices were unclear, and there were customer-specific variable pricing schemes. 

Method 

a) Examination of digital data 

After uploading the digital data to our forensic software, we performed indexing to make the digital data searchable with keywords. Considering keywords and the structure of the case, we examined tens of thousands of documents in various formats. We found that besides the discount transactions mentioned, the suspect also received commissions through other key activities such as procurement, sales, and logistics, and misused company assets. We presented the illicit activities with clear and compelling evidence. 

b) Acquiring accurate data and data analytics 

We conducted detailed analyses on the financial and operational data we obtained, focusing on customer orientation, supplier concentration, periodicity, unit prices, sales prices and quantities, operational records, and internal authorization and segregation of duties. 

C) Interviews with suspects and employees 

Based on the data obtained, we conducted face-to-face interviews with potential suspects and critical employees. During our interview with the suspect executive, he verbally confessed to receiving off-the-record commissions through various activities of the company without the knowledge of the company’s management and using the company’s influence and information for personal gain. 

As a result of our investigation, we identified that:  

  • The suspect used his position and authority for personal gain. 
  • The suspect illicitly collected off-the-books commissions through irregularities involving both the company’s internally produced goods and products purchased for commercial purposes. 
  • The suspect leveraged the company’s industry power and knowledge to gain personal benefits. 
  • The suspect’s spouse was also involved in the covert activities. 
  • While employed on the company’s payroll, the suspect engaged in secret collaborations with third parties, leading to conflicts of interest. He diverted the company’s business to third parties and obtained illegal gains from these collaborations. 
  • The suspect engaged in illicit activities, particularly in a specific business unit, by colluding with other employees within the company, and received bribes from the company’s business partners. 
  • Through close relationships with third parties, the suspect arranged for fictitious invoices to be issued and concealed the fraudulently obtained profits in companies with which he had secret collaborations. 

We calculated that the financial loss resulting from the fraudulent activities was approximately USD 15 million. 

OUR IMPACT  

Following our report, the company shareholders held negotiations with the suspect executive. Before the fraud case was reported to legal authorities, approximately USD 12 million of the calculated USD 15 million financial loss was recovered from the suspect.  

Additionally, the executive had to leave the company, forfeiting his entitled severance pay and bonuses. 

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