Upcoming ACFE Courses in Vancouver, Shanghai, Jakarta and Melbourne

AUTHOR’S POST

Mandy Moody, CFE
ACFE Social Media Specialist

Every country has its Enron. Or, I guess I should say its Olympus, its HSBC, its Caterpillar. The list could go on and on. Financial schemes morph, and the numbers get manipulated this way and that, but a few things remain the same. A fraud is perpetrated. The whole truth isn’t told. And, in the end, money, along with integrity, is lost.

Luckily, just as fraud knows no boundaries or borders, neither do fraud prevention and detection. For every Bernie Madoff, there are a hundred anti-fraud professionals dedicated to stopping fraud before it happens, investigating it to recover losses or helping to serve justice and restore balance. With the task of righting the financial and white-collar wrongs of the world, fraud fighters need a variety of skills. From interviewing to risk management, the tools of a fraud examiner are varied and unique.

With the goal of serving those who fight fraud worldwide, we are excited to announce a few new 2013 locations for some of our most popular courses. Below is a list of where you can find ACFE seminars around the world in the coming months:

• Professional Interviewing Skills
  Vancouver, B.C., Canada
  April 8-9
• Auditing for Internal Fraud
  Shanghai, China
  April 15-16
• Conducting Internal Investigations
  Jakarta, Indonesia
  April 18-19
• Fraud Risk Management
  Melbourne, Australia
  April 22-23

Corporate Governance in Japan: Memories of the “Japanese Miracle”

GUEST BLOGGER

Roger Aradi, CFE 
ACFE Marketing Manager

It’s one thing to get a conservative culture to change; it’s quite another to get a successful conservative culture to change.

The Economist has been examining corporate governance in Japan in the aftermath of the Olympus scandal. In the article “Back to the Drawing Board,” they describe how Japan Inc. has resisted attempts to revise legal requirements for corporate boards and point out how Japanese requirements differ from the standards of other nations, including many of their Asian neighbors. And in “Olympian Depths,” they go on to say, “The refusal to embrace higher standards of corporate governance is a further sign of short-sightedness.”

I am certainly not going to argue in favor of a system of corporate governance that can be described as insular and opaque. Clearly any system of governance that does not include a truly independent audit committee is lacking a vital component, undermining any internal controls they may have in place. But to write off the resistance to change as mere “short-sightedness” is to overlook one key factor. Japanese leadership may be reluctant to change their system of governance in part because their current system has worked so well for them in the past.

Japan went from being a nation in ruins at the end of World War II to a global economic powerhouse in the span of a few decades, a feat often referred to as the “Japanese miracle.” While many have researched the factors that made this “miracle” possible (see, for example, “MITI and the Japanese Miracle”), the current system of tightly interlocked, opaque and insider boards governed the Japanese corporations that drove this economic growth. In fact, I’m old enough to remember a time when the Japanese model was held up as a positive example, their long-term focus praised as an alternative to the American system’s obsession with short-term numbers. So perhaps Japanese business leaders, many of whom rose through the ranks during the Japanese miracle, can be forgiven for being reluctant to overhaul a system that seems to have served them well.

Improving corporate governance is a crucial part of the fight against fraud – not just in Japan, but worldwide. As anti-fraud professionals push for systems that proactively prevent and deter fraud, it is important to keep in mind that resistance may not be a sign of greed or malice – your client or organization may, like Japanese business leaders, be held back by memories of their own past successes.

The View from ACFE Japan on the Olympus Fraud Case

GUEST BLOGGER

Daisuke Wakiyama, CFE
President and CEO, D-Quest Inc., Vice President, ACFE Japan

The Olympus fraud case was and remains a very serious problem. Not only does it raise doubts about the transparency and soundness of the Japanese market, but it also raises questions about the reliability of the Japanese themselves. What’s devastating is not just the amount of money involved, but also the duration of the fraud -- and the fact that the whistleblower was not Japanese, but British.

Some may think, “A Japanese person would take part in fraud, but a British person would not” or, “A British CEO revealed fraud; a Japanese person could not do so.” This impression may stir a sense of distrust of the very character of all Japanese.

As you may be aware, Olympus, the global manufacturer of medical equipment with a market share exceeding 70 percent, avoided being delisted from the Tokyo Stock Exchange despite its concealment of a 100 billion yen loss. Based on the extended period of this concealment, the soundness of the company’s structure is naturally cast into question. People in and outside of Japan may look upon Olympus’ survival optimistically, but has market confidence been truly secured?

This is not something we can overlook as an isolated incident. Yet, we must keep in mind that this is a serious issue involving one company, rather than a sign of the deficient moral fabric of the nation itself and the corporate ethics/governance that shapes everything around it. We must remain vigilant to identify trends that may compromise accountability.

The interest in Olympus’ former CEO Michael Woodford may fade, but we can’t deceive ourselves into thinking that the story is over in the eyes of the world economy. Japan overall is a first-rate, advanced nation, but without a strong economy, Japan may indeed slip into the status of second-rate nationhood.

In the midst of an economic downturn, the eradication of the fraud undermining our nation and companies is critical to the structuring of a robust securities and capital market for efficient corporate activity. Amid such challenges ACFE Japan has many roles to fill and we are up to the challenge.