A fraud investigation plan for a false accounting and theft case

Date07 October 2019
Pages1216-1228
Published date07 October 2019
DOIhttps://doi.org/10.1108/JFC-09-2017-0086
AuthorMark Eshwar Lokanan
A fraud investigation plan for a
false accounting and theft case
Mark Eshwar Lokanan
Faculty of Management, Royal Roads University, Victoria, Canada
Abstract
Purpose The purpose of this paper is to formulate and propose a fraud investigation plan that forensic
accountantscan use to investigatenancial frauds. In particular, the paper sets out the structureand rationale
of the fraud investigation plan that both forensic accountants and fraud examiners can use in their
investigationof false accounting and theft charges.
Design/methodology/approach The paper uses the materialfacts from the Polly Peck International
fraud as a prototypecase upon which to build an investigation plan and detail potentialareas of investigation
to establishevidence for a criminal trial.
Findings The ndings revealed that the case can be used to provide insights on evidence gathering
techniques and testparticular models of fraud detection. The concealment and conversionevidence gathering
techniques provide fodderon how to gather and triangulate both direct and circumstantial evidence that can
be used to avoidmistrials in courts.
Practical implications The case is of interest to practitioners and forensic and fraud examination
students who would like to build on theirexisting knowledge and obtain insights into the steps to follow to
conduct an investigationand gather evidence to build a case. The paper makes specic recommendations to
enhancethe effectiveness and efciency of investigations.
Originality/value The paper is among one of the few to proposea fraud investigation plan designed to
investigatecases involving false accounting and theft charges.More importantly, the paper uses a real caseto
illustratehow to examine documentation/data and how such documentationwill be analysed in a trial.
Keywords Fraud, Benfords law, Neural networks, Algorithm, Decision trees, Investigation plan
Paper type Case study
1. Introduction and background
Polly Peck International (PPI) was a large UK-based company that was quoted on the
London Stock Exchange (LSE). PPI started with an astute investment by Asil Nadir
(Nadir) of a small textile company called Polly Peck. In the late 1970s, under the
management of Nadir, PPI used Nadirs stock market status to raise cash and set up a
Northern Cyprus fruit-packing subsidiary, Sunzest and Unipac, a cardboard box
factory, via a share issue(The Telegraph, 2012, para. 8). During the next four years,
PPI expanded into consumer electronics, hotel franchises and fruit and vegetable
packaging in Europe and expanded internationally. The expansion and rise in demand
for PPIs product led to a rise in its stock price at the LSE. In 1983, PPI share price
reached a high of £35 but crashed after rumours that the Turkish Government was
about to withdraw vital tax concessions. By the early 1990s, PPIs share price recovered
and sent its shares skyrocketing. The company made stratospheric prots and was
worth £2bn making it a nancial times stock exchange 100 player (Casciani, 2012,p.
11). In the summer of 1990, there were persistent rumours concerning opaque
accounting methods and manipulation of PPIs share price, which had reached an
intensity that could no longer be ignored by regulatory authorities, including the
Serious Fraud Ofce (SFO) (The Telegraph, 2012, para. 16).
JFC
26,4
1216
Journalof Financial Crime
Vol.26 No. 4, 2019
pp. 1216-1228
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-09-2017-0086
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/1359-0790.htm

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