Dirty Business: Exploring Corporate Misconduct - Research Paper Example

Dirty Business: Exploring Corporate Misconduct The present business world is indeed inundated with myriad cases of fraud which are usually perpetrated with the view of swindling money and conning organizations. In the recent past, media has been awash with several reports involving huge corporate scams and frauds which are perpetrated by business people through the use of information, systems or security breaches. In any case, the fundamental concern in the present world regards the need to reduce such frauds in the business world. The development of technology across the world has always been the greatest challenge in this regard given that it provides the avenue through which security measures can be hacked and operations sabotaged in order to provide the leeway for swindling cash. In the recent past, the FBI has realized a series of cyber crimes where criminals use certain compromised online banking credentials of US businesses in order to send illegal wire transfers to Chinese companies. In the timeframe between March 2010 and April 2011, the FBI had already realized a total of over twenty incidents in which the banking information of small and middle sized U.S businesses were compromised and the information used to send money to certain Chinese economic and trade companies located next to the Russian border (Ferrell 2011). By April 2011, the total number of attempted frauds in this regard was estimated to amount to over $20 million. However, the actual losses that were realized in this respect were $11 million. The whole scenario involves the application of Information Technology where computers within the company are used to initiate the whole process. In this regard, the computer initiates fund transfers on behalf of the U.S business and the banking information of the business is compromised through publishing to a malicious website from which the information is thereby derived. Through such computer aided process, the hackers are able to harvest all the banking information of the business. The challenge arises when the authorized user tries to log into the account and is directed into another webpage while the authentic company’s website reads to be under maintenance. In the process of experiencing challenges in logging on, the malicious characters are then able to initiate illegal fund transfers to intermediate banks located in New York from where the funds are then transferred to the Chinese bank accounts (Punch 2012). FBI realized that the whole fraud had actually been occurring through a very elaborate matrix involving several parties some of whom are part of the organizations that are affected. In this case, the victims are often small and medium-sized businesses which hold account in local commercial banks and most of which use the services of third party online service providers. It was realized that very large corporations were basically spared from this business fraud owing to their elaborate Information Technology systems and elaborate technological aspects that create a challenge for the malicious operators. While the victims are normally businesses and other smaller organization in the U.S, the recipients of the wired cash are usually economic and trade companies located in the border province of Heilongjiang in China. On further investigation, it was realized that the companies are registered as under the pretext that they operate in economic and trade activities in the port towns of the province. The FBI further identified several companies that were affected more than once by the wire transfer syndicates. In receiving the transfers from the United States, the malicious actors were keen in using one company per transfer after which the company was never used again as a future recipient of the funds. The recipient companies are located in the port cities of Raohe, Fuyuan, Jixi City, Xunke, Dongning and Tongjiang. It was further realize that the official names of the companies included the words “trade”, “economic and trade” and “LTD”. In a way, the economic and trade companies seem to be very legitimately registered companies which conduct their operations in China and even hold Bank accounts with the Agricultural Bank of China, Bank of China and other notable financial institutions in the country. The greatest challenge in the present case is however the fact that it is still unknown whoever is behind the unauthorized wire transfers from the United States to China. Further, it is still unknown why the legitimate recipient companies receive the funds in the first place. It therefore creates the need for much scrutiny in order to unearth these fundamental facts nd realize the basic objective behind all the dealings. It has been revealed that the unauthorized wire transfers are normally conducted in values ranging from between $50,000 and $985,000. In certain instances the transfers are normally over $900,000 but the recipient companies usually find it easier to receive values below $500,000 a figure that is basically accepted by most commercial banks in China. Apart from initiating the wire transfers the actors also sent domestic ACH and further sent money to money mules across the United States within seconds of wiring the foreign transfers. In the domestic case, the transfers normally range from $200 to $500,000v (2011). In case the fund transfers are successful, the money is usually withdrawn by the recipients within a very short time. In order to accomplish their objectives, the actors normally use certain malware the source of which has not really been established. The malware has the effect of erasing itself quickly from the hard disk of the computer before the IT department can locate it and take the necessary actions. The malware is certainly very complex and provides the actors with the best ground to institute their activities without regard for fear of the Information Technology department of the organizations. Recommendations In the face of such emerging realities and challenges, it is suggested that banks should effectively inform their clients in case any suspicious wire transfers are conducted from their accounts toward the specific Chinese cities. In addition, any wire transfers destined for the six Chinese cities should be effectively scrutinized in order to determine its authenticity and ensure that it is not any form of fraud. Businesses are also advised to install very elaborate Information Technology system that can effectively address their needs and provide ultimate security to the operations. The challenge of business fraud in the contemporary world is therefore a very real and practical affair that is causing the loss of millions of dollars across the world at every instance. The challenge is further coupled by the increased development of the Information Technology sector which sets the ground for the development of the efficient IT structures. The challenge of such fraud on the business world is much more realizable in the present order given the magnitude and the amount of funds normally lost in the process. References Ferrell, O. (2011). Business ethics: ethical decision making and cases (8th ed.). Mason, OH: South-Western Cengage Learning. Punch, M. (2012). Dirty business: exploring corporate misconduct : analysis and cases. London: Sage Publications. Turner, J. E. (2011). Money laundering prevention deterring, detecting, and resolving financial fraud. Hoboken, N.J.: Wiley. Read More