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Getbig Main Boards => Politics and Political Issues Board => Topic started by: headhuntersix on June 12, 2009, 07:52:26 AM
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Good job Joe..worthless VP.
NEW YORK (MarketWatch) -- Swindlers, con men, and thieves could siphon off as much as $1 out of every $10 spent as billions of dollars in stimulus money begin flowing into all corners of the economy in coming months.
Companies will face increased pressure to try to stem the tide, and need to be prepared to safeguard data as well as the cash, according to David Williams, the chief executive of Deloitte Financial Advisory Services.
Williams said this week that the money flowing from the current stimulus package is particularly vulnerable to fraud because almost all movement of money is now done electronically.
"We're telling our clients to be very careful and to make sure their firms are resilient in terms of dealing with the potential opportunities for fraud and waste," Williams said.
That means keeping an eye out for the traditional scams such as billing for services not performed. But it also means firms must become even more diligent about electronic records and network security.
"It becomes ever more important that firms remain diligent about their data," Williams said.
Earlier this month, FBI director Robert Mueller warned the nation to brace for a potential crime wave involving fraud and corruption related to the economic stimulus package. "These funds are inherently vulnerable to bribery, fraud, conflicts of interest, and collusion. There is an old adage, that where there is money to be made, fraud is not far behind, like bees to honey," Mueller said. See full story.
Earlier this month, Vice President Joe Biden said some stimulus-related scams had already happened and that mistakes were inevitable. President Barack Obama said Monday that the White House is trying to make sure the stimulus money isn't being ill-spent.
He said many of the safeguards and transparency measures "so far seem to have worked" but added his administration will have to stay vigilant.
"At a time when everybody is tightening their belts, the last thing the American people want to see is that any of this money is being wasted," Obama said.
Potential damage
Williams suggested that the fraud and theft losses from the roughly $787 billion stimulus package approved earlier this year could reach about $50 billion.
"The rule of thumb typically is that of the about $500 billion worth of money that's going to run through the procurement process, somewhere between 5% and 10% of that usually finds it way into potential problems," Williams said. "That's sort of the benchmark that I use."
Williams said firms would be well advised to beef up monitoring of their transaction systems, and that his firm is helping clients develop software and computer systems to predict and catch fraud before it gets started.
Williams acknowledged that the FBI has geared up its efforts to focus on financial scams. He said other agencies, including the Department of Justice, as well as industry watchdogs are also beefing up oversight.
"They are going to spend their time making sure that this money gets to being used in the way it's supposed to be used," Williams added.
After 9-11, counterterrorism became the FBI's top priority, even as the agency grappled with corporate crime such as the Enron and WorldCom scandals, said Muller, who took the helm of the FBI on Sept. 4, 2001, just one week ahead of the terrorist attacks.
The 9-11 attacks prompted the FBI and other government agencies to divert resources from financial fraud and other corporate crimes to fighting terrorism, including the transfer of 2,000 agents tracking white-collar crime to counterterrorism, Mueller said.
But now the focus is returning to white-collar crime and fraud in a big way.
"These rules will come right back to haunt companies if they are not careful," Williams said. "So firms need to make sure that their organizations are ready to receive funds and protect those funds diligently as the potential for fraud surfaces."
He said that that for the largest companies used to doing contract work with the government a high level of oversight will be business as usual.
"But there will be others where this is unprecedented and they will have to do more to comply," Williams added.
Meanwhile, Obama said the White House will keep trying to make sure citizens know where the stimulus money is going.
"We're going to do it continuing to operate in a transparent fashion so that taxpayers know this money is not being wasted on a bunch of boondoggles," Obama said at the White House on Monday.
Robert Schroeder contributed to this story