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Friday, 5 April 2013

Food Industry Fraud Prevention

Several fraud databases exist. However, most are not free. For the EU, you may check the Fraud Notification (RASFF Portal). 

Profiting through crooked means does not go unpunished indefinitely. Justice may not come immediately but it is inevitable:

A person who has nothing to hide, has no hidden mines to fear: 

“Catch them and put them in jail after they have been made to pay huge fines and legal penalties!” Does this sound familiar? With each detected incidence of fraud such as the horse meat and other scandals, the industry and regulators hastily resort to “more stringent enforcement”. At times, the scope of enforcement is expanded to cover more types and sizes of operations.

While they may seem prudent, experience continues to show that hasty corrective actions do not provide dependable and sustainable solutions to the problem of fraud. The root cause needs to be addressed. On the other hand, hastily assembled seminars that take advantage of these situations also do not provide the answer to fraudulent tendencies. As well, the pessimistic conclusion that “we will always have fraudulent operators” is not an acceptable resolve. The problem requires more than knee-jerk solutions or hasty conclusions.

Regulations, enforcement, education, and training programs are part of the solution for sure but these must be the right kinds of programs with proper planning and implementation. Inspection scrutiny, penalties, seminars on various analytical tools and testing methods to detect food fraud are also good but these need to be in conjunction with reliable methods and strategies to address the root cause of fraudulent tendencies.

The misconception that fraud or crime pays if a person could get away with it needs to be addressed. Fraudulent tendencies need to be countered with the reality that complete transparency ultimately pays more. Operators who engage in fraudulent behaviour because of some anticipated gain need to be punished but they mostly need to be educated on the merits, and trained on the methods, of profitable transparency.

Fraudulent operators may simply not know how to make their operations profitable while maintaining transparency but they are often quite creative in devising cunning ways to “beat the system”. As long as they understand "the system" to be punitive in one form or another, they are most likely to continue along the paths of fraudulent creativity. Except where the individuals involved are psychopathic fraudsters or incorrigible criminals, the undesirable creativity can be turned around with the right kind of education, training, motivation and assistance. Many business operators who may sometimes turn to less than transparent methods are not psychopathic fraudsters or incorrigible criminals. They simply want to make good profit but they may need to be educated and trained in proper product and market development skills.

I believe that many of the operators who may wish to make a quick buck through fraudulent means would gladly learn ways to make a good profit without resorting to fraud. In the absence of any psychopathic tendencies, many operators understand that any detected evidence of fraud in their operation could instantly and permanently put them out of business. They also know that fraudulent behaviour could possibly land them in jail after they have been made to pay huge fines and legal penalties.
If we mean business about stopping fraud, we must develop strategies to address the root cause instead of knee jerk reactions with different parties taking opportunistic advantage of current situations and incidents.

Questionable Motives within the Anti-Fraud Camp

In the wake of published incidences of fraud many anti-fraud businesses have emerged and are continuing to spring up. While the fraud detection solutions now on the market are to be applauded, I have some concerns. I strongly suspect that some within the anti-fraud camp are openly denouncing fraud but secretly desiring its continuation. Some honest solutions are recognizable. However, callous or sinister motives are cleverly concealed in many suggested and commercialized anti-fraud solutions. The providers of these solutions may mean well without realizing that some of their suggestions can, in fact, work against the successful prevention of fraud. It requires very little ingenuity for anyone to know that the perpetuation of fraud provides income opportunities for providers of anti-fraud solutions. It is therefore not a far-fetched suspicion that some anti-fraud solution providers actually like to see a thriving fraud economy. What is far-fetched is any thinking that operators of fraud detection and prevention businesses have purely altruistic motives.

Those who decry fraud and wish to mitigate its effect  must not create environments that foster it:  
Many proposed solutions are clearly driven by economic interests. Nothing is wrong with having economic interests except anti-fraud solution providers may secretly desire or even support the continuation of fraudulent activities to keep their businesses alive. I have not personally witnessed any of these solutions in action but I do not expect many of them to adequately cover the scope of fraudulent activities in the marketplace today. For example, if a solution is designed to identify deliberate product adulteration, mislabelling, false product performance claims, etc, it is doubtful that the same system can also detect all types of fraudulent claims and business practices. Besides, all detected instances of product adulteration may not be because of deliberate fraud. Accidents do happen. On the other hand, fraudsters are constantly devising ways to deliberately defraud the consuming public in the “catch me if you can” game.

Even some solution providers are hearty participants in the game of fraud. For this reason, solution seekers must remain on guard and watch for the old give-and-take trick of some solution providers:

An Ideal Solution Combination
Fraud detection solutions are regrettably needed today because of greed in the market place. Fraudsters are continuing to find quick (fraudulent) ways to make a buck. Instead of yielding to the same greed and sinister motives that drive fraudsters, anti-fraud solution providers can distinguish themselves. They can work to provide a genuine combination of effective fraud detection and prevention solutions. While detection deters, it does not address the root causes of the fraudulent tendencies of fraudsters. As previously noted, operators who engage in fraudulent behaviour because of some anticipated gain need to be educated on the merits, and trained on the methods, of profitable transparency. The industry needs solution systems that detect fraud as well as provide strategies for the needed education and training.

Please feel free to share your thoughts. . . 
 Posted by Felix Amiri


Felix Amiri is currently the chair of GCSE-Food & Health Protection. He is also the Director of Technical Services at Amiri Food Industry Support Services (AFISS) and the Canada/U.S representative for the World Food Safety Organisation.

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