November 11, 2013
 
MURDER OF BANK MANAGER TIED TO FRAUD
New evidence has emerged in the case of a murdered Scotiabank branch manager in Mexico who was tied to a multimillion-dollar fraud involving bank employees, according to a report by CBC Television’s The fifth estate. After the branch manager, Maru Oropesa, was found slain outside Mexico City in 2001, bank investigators sent to look into the case discovered she and her former boss, Jaime Ross, were involved in a US $5 million fraud. Investigators ultimately uncovered US $14 million missing from Scotiabank accounts in Mexico, and implicating 16 bank executives and other employees. Aside from Ross, who is serving a 15-year sentence for fraud and money laundering, none of the other bank employees were prosecuted, although all were fired by the bank. More than a decade later, The fifth estate reports that newly discovered cell phone records may implicate Ross in Oropesa’s murder.
 
Lessons Learned
This story reveals the dire consequences that gaps in management controls and fraud risk assessments can create for multinational banks. Not only has a murder occurred, but also the already modest financial positions of many Mexican pensioners have been endangered by the coordinated fraudulent actions of a group of Scotiabank employees.
 
With globalization and multinational operations having been so long a dominant feature of how many businesses conduct themselves, it can be puzzling as to how and why these kinds of fraudulent activities cannot be better detected and prevented. Multinational corporations ought to be at least as vigilant, and have controls and fraud prevention mechanisms in place in their satellite operations that correspond with those in place in their home countries. Some of the key measures organizations need include:
  • Based on a comprehensive understanding of national laws in their international markets, a fraud prevention and compliance regime that addresses the way those local laws are designed to work. In many parts of the world, higher risks for fraud demand higher standards and efforts be made to address them, including heightened oversight and management controls.
  • Similarly, an understanding of how criminal prosecutions work in international markets in which they operate. In this case, Scotiabank could have facilitated the Mexican investigation and prosecution of this bank fraud by initiating criminal charges against those employees under suspicion, but chose instead to fire them, effectively closing down the possibility of further inquiry, according to The fifth estate report.
  • Strict controls over the issuance of bank cards, including ATM cards, to employees, along with anti-skimming detection software and other spot-checking mechanisms to detect illegal activities.
  • Rigorous controls over banking transfers and deposits, particularly those involving employees and anyone known to have connections with those employees.
  • Enhanced controls regarding loan approvals, including segregation of authorities procedures and counter sign-off from an authority outside Mexico, where loans involve employees and are more than a specified amount.
  • More broadly, the application of timely governance and accountability processes by head offices, senior management, and the board of directors to regularly review the fraud health of international operations, make necessary adjustments to policies and procedures, and take action to address inappropriate or illegal actions, when necessary.