14.8

Why frauds take place?

• Non-observance of rules • Laxity in Supervision• Lacunae in Rules and operating procedure• Lenient approach against minor

irregularities– with warning, censure etc. where a strong

penalty is warranted

24.8

Why frauds take place?

• Improper induction of technology– Misuse of Password,– Retaining data entry module, – data entry based on cut off date– Data entry based on passbooks etc

34.8

Miscellaneous and Fraud branches

• If the “L” branch (Miscellaneous) of Divisional office is properly functioning , then there will

not be any need for “F” branch.

44.8

Kinds of frauds

• Savings Bank transactions• Treasury / Sub Accounts (Cash & Stamps)• Money Orders/ Bogus Money Order• Franking Machine• Postal Life Insurance• Theft & Dacoity• Computer related

54.8

Kinds of frauds…..

• Mails• Loss of contents of bags• Loss or tampering of bags• Pilferage of stamps• Pilferage of articles• Use of defaced stamps• Loss of cash bag/valuable• Insured Articles, Registered & VP article

64.8

Ingredients for detection of fraud

• WHAT

• HOW

• BY WHOM• WHEN• WHY

• Details of offence, violation of rule

• Manner in which it is committed

• Responsibility• Period of fraud• Criminal intention

74.8

Object of Investigation

• Detection of source of the fraud• Identification of modus operandi• Examination of material objects used in the

fraud & their preservation• Assessment of

– extent of loss – damage to image of PO – extent of customer dissatisfaction

84.8

Object of Investigation….

• Identification of failures & lapses that abetted the fraud

• Detection of related frauds• Fixing of responsibility

– Main culprits– Active abettors– Passive abettors (contributory negligence)

94.8

Object of Investigation….

• Assessment of compensation/ claim to be paid

• Decision on whether to report to police• Gathering evidence for departmental action• Remedial measures to avoid recurrence• Suggested amendments to rules • Restoration of faith of customer

104.8

Investigation

• Emanated from complaint ,enquiry, surprise checks, inspections, verification etc

• Promptness – without loss of time – reach the spot

• Commence the enquiry with the inputs available (complaint, hearsay, tip-off etc)

• Keep a keen eye on the surroundings

114.8

Investigation…

• If prima facie evidences lead to a fraud, collect and seize the connected records.

• Prepare the inventory wherever required• Record the statements of witnesses,

officials involved and the accused• Decide on immediate Suspension/POD

124.8

Seizure and verification of documents

• Identification of related documents • Verification of available inputs with reference

to records.• Establishing a prima facie case based on the

verification• Identifying the main offender(s).

134.8

Seizure and verification of documents…

• Recording the statement of the main offender based on the records, statement of customers/complainant and statements of witnesses

• Recording the statement of supporting staff including subsidiary offenders

• Seizure of all related documents

144.8

Preparation of Inventory

• Shortage of Cash and stamps– Physically verify the available cash and stamp

balances in the presence of the SPM/BPM and other available staff

• Shortage/loss of Savings Certificates– List of unsold stock

• Shortage/loss of Indian Postal Orders– List of unsold stock

154.8

Preparation of Inventory…

• Shortage/loss of Accountable articles – List of insured/VP/eMO/Regd

• Non – Delivery of Ordinary articles– List of undelivered letters

• Pilferage of postage stamps– Raiding of the counters conducted and unauthorized

possession of articles and stamps noticed – to be seized.

• Unauthorized possession of Pass books etc.– During inspection/investigation – to be seized

164.8

Recording Statement

• Date and place at which and before whom the statement is recorded is to be mentioned

• Whether the accused GS was on duty on the date of occurrence of fraud/ irregularity is to be mentioned

• The sequence of events which led to the fraud is to be got narrated in the statement by putting appropriate questions.

174.8

Recording Statement….

• If the official is not willing to narrate the incident, questions should be recorded by the investigating officer in the statement itself for the GS to answer to the specific questions

• All the supporting documents should be shown to the GS while recording the statement and got linked as per the sequence of events.

184.8

Recording statement contd…

• There is no harm in recording a second statement on a subsequent date to elucidate any left out evidence

• The investigating officer should understand the nature of irregularity and should try to establish it through the records and statements

194.8

Recording statement contd…

• If any inventory was prepared, it should be linked

• The statement should be got signed by the GS in all the pages

• If needed it should be recorded in the presence of witness either independent or an available official of PO

• The investigating officer should sign the statement with date noting “Before me” or “Recorded by me”

204.8

Preliminary Investigation Report

• Preamble to contain the source/information which led to the commencement of the investigation showing the date of visit/conducting the enquiry

• A brief description of the office is to be included• The basic information pertaining to the

irregularity/ fraud to be furnished• The findings based on the evidences collected to

be included

214.8

Preliminary Investigation Report…

• The extent of involvement of the main offender and subsidiary offenders is to be assessed and furnished

• There has to be a conclusion based on the findings.

• The further course of action proposed to be furnished

• The details of assistance required should be made clear

224.8

Past Work Verification

(In case of detection of Fraud)

234.8

Past Work Verification

• Verification of work of official done in last one year from date of commission of fraud– Savings Bank:

• Cent per cent

– MO & others:• Some % as per the quantum of frauds suspected

minimum of 20%

244.8

Past work verification - Savings Bank

• With help of basic records list in duplicate to be prepared in format shown next slide.

• After verification one copy of the list is sent to HO for verification with reference to HO records

• After verification by HO, the list should be once again verified by IP to ensure that there is no discrepancy

• If any discrepancy further verification by contacting the depositor should be done.

254.8

Sl.No. A/C No. Name & Address

D.L.T Balance Sign.of IP/MO

Remarks(Sign/SB-46)

1 2 3 4 5 6 7

01 11002 Ramya 2.2.11 1050 IP Sd/

02 11012 Bhama 2.10.10 50 - SB-46

03 11026 Shyama 30.1.11 5052 MO-I Sd/

04 11o52 Linganna 12.3.10 6901 MO-II Sd/

264.8

Past work verification….

– On completion of past work verification submit final report containing following information• Total amount of fraud involved• List of officials amounting contributory

negligence• Claim applications• Any other items requires attention

274.8

28

Limit of handling Loss & Fraud

Authority Limit

IP/ASP Up to Rs.50,000

Divisional Head 50,001 – 100,000

AD/APMG(INV) 100,001 – 2,00,000

DPS/PMG/CPMG Above 2,00,00

Cases to be reported to Directorate

Above 5,00,000

4.8

Components of DLIR/CLIR

• Introduction – Profile of the place • How the fraud came to light• Departmental enquiry -commencement & completion• Total amount involved and net loss• Adjustment of loss/ particulars of recovery• Modus Operandi• Principal Offender – Biodata with past history• Criminal prosecution• Preservation of Records

294.8

Components of CLIR/DLIR….

• Visits and Inspection• Contributory negligence – Divl office, Sub

Divisional office, Account office, HO, SBCO• Settlement of claims• Lacunae in Rules• Action taken so far – 100% verification,Issue of

Charge sheet etc• Action to be completed.• SQF is to be attached to the CLIR

304.8

314.8

Burglary of Post office

• Direct the SPM/BPM to prefer police complaint

• Rush to the spot • Preliminary investigation in the presence of

Police• Prepare inventory• Assess the extent of loss – Cash, stamps,

NSC/KVP etc

324.8

Burglary of Post office…

• Assess the damage to the building/ departmental property.

• Arrange to replace the damaged doors and locking arrangements.

• The amount of loss to be charged under UCP.• Police case to be registered and copy of FIR to

be obtained.

334.8

SHORTAGE OF CASH

• Time of visit makes the difference• Verify cash and stamp balance• Get SO/BO A/c updated on the spot, if not done.• Check the a/c ready for despatch & verify

vouchers

344.8

Cash shortage...

• Arrive at correct balance w.r.t. last acknowledged OB– SO/BO slips, – Vouchers/bills, – Transit figures/advance (Registered list etc) – Hand to hand receipt book,– TCB– Cheque book

354.8

Cash shortage...

• Verify– Out of account Cash – ‘paper money’ (cash advance to DO etc)– Stamp advance to PAs/Stamp vendor– Unaccounted late collection– Postman returns

364.8

Cash shortage…• If any loss established

– Prepare inventory of cash and stamps– Record statements of SPM/BPM and joint

custodian– Finally charge amount found loss under UCP

• Check whether the SPM/BPM make good the shortage on the same day. If yes, accompany him and get the amount credited.

• In the case of SOs-contact the Divl.Head and report extent of shortage noticed

374.8

Cash shortage…

• In the case of BPM, if necessary, keep him under POD and get it ratified within 15 days.

• Report to Police – culprit got arrested– In case amount not made good– Amount more than Rs.5000/

384.8

Cash shortage…

• If on the date of visit the SO/BO found closed even after several hours– Contact the Divisional Head– Report to Police immediately, register a case– Forcibly open the PO in the presence of Police. – Prepare the inventory and assess the loss as

already explained in the presence of the Police and the available staff.

– Get alternate arrangement made for functioning the office

394.8

Cash shortage…

• If PO opened - SPM/BPM found absent– Summon him before verification of cash and

stamp balances– If he doesn’t turn up and his whereabouts not

known– Contact Divisional Head – Make alternate arrangement and then verify

cash and stamp balances

404.8

Cash shortage…

• Once the loss is established the SPM/BPM should not be allowed to continue and all the supporting documents to establish the cash shortage should be taken into custody

• In BOs seize all records relating to SB/RD/TD and also collect the BO daily accounts from the AO

414.8

Savings Bank –Frauds- In BOs• On detection of the Fraud seize all the records

relating to SB/RD/TD journals• Seize SB-26/SB-28 receipt books and NC-4(a),

if necessary• Collect the BO daily accounts from the AO if

necessary• Prepare/collect list of accounts of all types

standing open at the BO from the HO/AO• Commence verification based on above lists

by contacting the Depositor/verifying PBs424.8

SB frauds in BOs…

• Get the signature of the depositor in token of having admitted the balance in the list or separately.

• The methodology is to prepare address slips, sort them beat wise and proceed for verification in each beat along with GDSMD

• SB-46 notices by Regd Post should be issued in case of depositors not available

• During verification, wherever difference in balance noticed, take PB into custody issuing receipts.

434.8

SB frauds in BOs…

• Without any loss of time DPB as per HO records to be got issued

• Verify all the cases of SB/RD/TD closures for a period of one year initially and if frauds are detected, extend the period of verification of backwards by one year each.

• Verification MO payments made by the BPM, Insured/VP articles also be made if necessary

444.8

SB frauds in BOs…

• Record statements of depositors, BPM any other if needed

• Get amount credited at AO with a letter a/t SPM/PM by BPM

• Collect claim papers simultaneously• Reports –

– Preliminary report – Call for voucher etc from HO through Supdt.– Periodical report– Final report

454.8

SB fraud at SO

• As in the case of BOs, corresponding records such as Long book, SO account, SB-28 receipt, hand-to-hand receipt book(Submit account report in respect of computerized SOs) should be seized

• SO daily accounts, LOT and Vouchers should be obtained from HO

464.8

SB fraud at SO…• In the case of Single handed SOs, the same

method adopted for BO to be followed • In the case of B-Class and above in addition

following steps to be taken– Involvement of PA/ SPM/Treasurer/HO/SBCO

should be clearly established and if needed their statement recorded.

474.8

RD fraud at SO

• PO staff - – Non-accounting of deposits/ RD schedules– Short-accounting of deposits/schedules– Belated credit of schedules/deposits– Fraudulent interim withdrawals – Fraudulent premature closure /closure– Repeated closure of same account– Misuse of RD passbooks/pages/substituting of

pages of RD PBs etc484.8

RD frauds contd….

• MPKBY Agents - – Non-credit of collected deposits– Non-opening of accounts– Fraudulent withdrawals/premature

closure/closure – Making fraudulent entries in PBs– Misusing the pages of PBs– capitalizing the freedom of access inside the

post office – manipulation of records

494.8

RD frauds contd….

• The investigation pertaining to frauds committed by PO staff is the same as for SB & for non-accounting of RD schedules take action as below– During inspection/ visits, collect RD schedules

for a period of at least three months from the agents and verify the same with respect to SO records.

504.8

RD FRAUDs - at SO

• Check schedule and – Ensure total is correct and accounted in SO a/c– Ensure amount acknowledged by the SPM is

correct– Ensure no correction in entries– Ensure no discrepancy in Schedule number

514.8

RD fraud at SO

• Care should be taken to see that interim withdrawals if any made is also included in the verification of accounts

• List of closed RD accounts should also be prepared and verified

524.8

Savings Certificates fraud

• Non-accounting of stock/Loss of certificates check– Stock with reference to invoices– Check for continuity of invoices received– At HO, check whether invoices properly

accounted– NC – 12(a) maintained at HO

• Divisional office to circulate the details of lost certificate for inclusion in negative list

534.8

Savings certificate fraud…

• Fraudulent discharge check– Whether fraud pertains to discharge of same

certificate again and again. If so:• Whether relevant discharge journal was forwarded to HO• Whether supporting certificate was also forwarded to HO

• If the fraud is established, seize discharge journal, original application for purchase, relevant certificate vouchers, SO account, Hand to Hand to receipt book

544.8

Savings certificate fraud…

• Fraudulent discharge by issuing duplicate certificate check– Whether duplicate certificate issued after

following correct procedure – Whether the discharge particulars of original

certificate were omitted to be noted on the application

554.8

Savings Certificate fraud…

• Fraudulent discharge by issuing certificate of verification check– Whether the request certificate of verification

was received through divisional office before it was issued by the SPM

– Whether relevant entries were made in the original application for purchase when the certificate of verification was issued.

– Whether NC-10 prepared by paying office

564.8

Money Order Frauds

• Detection of MO Fraud surfaces on inquiry into Complaint/verification

• Contact the payee and record his statement based on the complaint

• Verify the veracity of the complaint/statement with reference to PO records (BO slip, BO journal, Postman Book for BOs and HVMO list, MO-3 , Postman book/MO delivery slip for SOs)

574.8

Money Order Frauds

• Record the preliminary statement of accused• Send requisition for paid voucher from

HO/Postal Accounts Office• Record statement on basis of voucher of all

concerned • In case of disputes of it should be taken up

with Examiner of questioned documents

584.8

Loss / abstraction of Insured articles

• Seize the relevant registered/parcel list• Secure the bag, seal, chord etc of the bag in

which article was invoiced as received• Identify the officials who had handled the bag

right from its receipt till it was opened• Record their statements

594.8

Loss / abstraction of Insured articles• Observe there was any non-observance of

rules – Not weighed, seals not checked, not handed over under acquittance, condition of the bag was not challenged by the GDSMC/Mailguard/MM/Gr-D/Mailagent/ Delivery PA/Regn.delivery PA/Parcel delivery PA etc

• Fix responsibility for the loss/abstraction

604.8

LOSS/ABSTRACTION OF MAIL/ACCOUNT/CASH BAGS

• Study the arrangement of receipt and dispatch of mails• Check

– Whether there was any delay in receipt/dispatch of mails at various offices

– Whether bags were allowed to remain unattended at various points without immediate clearance

– Whether the bags were exchanged under proper acquittance

614.8

Loss/abstraction of bags…

• Check…– Whether any error book entry was made regarding

the condition of the bags– Whether the seals etc are preserved when the loss

/ abstraction was noticed– Whether there were any lapses on part of office

which had closed the bags (not sealed, cash bag not locked and sealed etc)

• Seize the bags in question, seals, chords, labels, mail lists etc

624.8

Have a thirst for detecting fraudKeep your eyes and ears open

Update your knowledge both in Rules and procedures and

Technology

634.8

LIVE AS IF YOU WERE DIE TOMORROW

LEARN AS IF YOU WERE TO LIVE FOR EVER

644.8

Guidelines for Guidelines for Investigation in Investigation in

computerised environmentcomputerised environment

654.8

Types of Frauds in Computerized Offices

• Stamps prepaid• Supervisor password known to operators• Inclusion of articles & MOs • Manipulation of reports• Use of data entry module to include transactions

in savings instruments• Violation of security instructions issued by

Directorate

664.8

Collection of Material Evidence

• Initial enquiries - the usual way • Indications of fraud - material evidence in the form of shift reports etc should be collected• Take back up of all databases in the presence of administrator and head of office• Search office for CD’s/floppies containing data and take possession of the same. Check the material contained in them for a clue to the modus operandi

674.8

Security Environment

• Examine the security environment of the office• List out the names of officials concerned and make enquiries with them• Whether supervisor allowed operators to use his pass word• Whether administrator password is known to operators• Whether password policies are enforced through the system

684.8

Modus Operandi

• See whether any programming software are installed and running. Get the help of the administrator or any other specialist as to the function of such software.

• Whether the accused has access to any systems both in the office and also outside software with which the frauds were committed in these systems also;

•Whether the accused owns a system and whether it is possible for him to misuse the departmental applications using his/her system

694.8

Scope of the Fraud

• Check all the articles posted on that day/receivedfor delivery on the day with the relevant reports and see whether there are any indications as to fraud• Collect receipts from customers and check with office records• Whether receipts are generated through authorised offices only• Check whether receipts collected are in the form supplied to the office• Check the log on pattern of the user• Check the log files generated in administrator access

704.8

Clues from System Administrator Check the login pattern of the user - whether user was logging in at a time he/ she has not been assigned any work like beyond counter hours/ on holidays etc. Take a back up of all such log files. The administrator’s option generates log files of changes to tariff and other items made by the supervisor; check whether there are any indications in this log.• Check whether frauds committed by manipulating the database • Check the version software installed

714.8

• Note:• Exercises are available in a different folder

724.8