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Copy of Case 8-14 Mohamed salem El-hadad, Internal Auditor

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Transcript of Copy of Case 8-14 Mohamed salem El-hadad, Internal Auditor

Dress up your Scrapbook with these fun extras! Stickers Scraps Other Materials pssstt...
you can crop these! (right click on any object to "Add My Collection," for use in other prezis.) (And don't forget to delete this white frame when you're done) Case 8.14
Mohamed Salem El-Hadad, Internal Auditor " " late 1995
El-Hadad involved?! " " Profile
Mohamed Salem EL- HADAD What did he do? Egyptian 1976
Undergraduate accounting degree Biodata Work History (Part 1) Egyptian military forces 1976 1981 Alexandria: Large Hotel Abu Dhabi, UAE 1979 Visit to UAE’s embassy in Washington, D.C. 1992 supervisory audit position in Washington,D.C. 1993 compulsory hotel Entry
Level
Position Auditor in UAE Ministry of Education cultural attaché & deputy you should apply for open auditing position in the embassy involved “the audit and review of all expenditures and accounting methods of the cultural attaché and the educational expenditures for UAE students in the United States, and reconciliation of all bank accounts.” cultural attaché as IMMEDIATE SUPERIOR Suppervise 8 other accountant january april however... what happened.... Secret Account Healthcare Payment Fraud provide healthcare coverage for FRAUD by assisted by deputy cultural attaché &
Embassy's chief Accountant but not so, if want they have to pay monthly. However, & co. deposit into secret bank account & use to pay for 's Tuition refunds frauds have program of who attend a U.S. Uni. "dropped" courses early refund secret account El-Hadad also victimized two additional secret bank accounts used by the conspirators

the three individuals had stolen at least $2 million. Early 1994: Fired!! Deputy Chief Accountant 3 other completed his annual performance appraisal of El-Hadad for 1993:
“excellent employee”
99 / 100 points 1994
new cultural attaché.
recommended:
promotion,
receive a salary increase
merit bonus.
plaudits from numerous UAE government
officials, most notably the Minister of Finance, for his role in uncovering the embezzlement
scheme. UAE State Audit Division:
Improper payment to El-Hadad by & Co. compensation for overtime that he had not worked,
expense reimbursements to which he was not entitled,
payment of healthcare premiums for his family. investigation initiated by Ministry of Higher Education and Scientific Research (HESR) HESR:
Embarassed
Ongoing feud with New Cultural attaché RUMOR Abu Dhabi 1996 : Cultural attaché entry-level auditing job for the UAE’s military attaché in the Washington, D.C., embassy HERS Minister RUMOR Appeal of dismissal DENIED prominent figures testify work ethic & integrity Well documented (provided by HERS Ministry), thus justified 1996-1997
No hope for auditor/ accountant Job apply prospective employer contacted UAE Embassy wife dismmised because he refuse to withdraw complaint business 2003 failed, forced to rely on family member Before leaving in 1997 El- Hadad file a lawsuit againts UAE Embassy embassy had wrongfully terminated him,
he had been defamed
accounting career had been destroyed Sovereign immunity VS "Commercial activity" civil trial in July 2001 Forged Document basis for dishonesty allegation is FORGED State Audit Division had ignored exculpatory evidence that El-Haddad had not been involved in the fraud Honest reputation UAE was ordered to pay El-Hadad $1.25 million for lost wages, $500,000 of damages related to the defamation he had suffered, and accrued interest on both amounts since the date of his termination in 1996. repeated appeals by UAE Attorneys rejected,
at 2007 Supreme Court refuse to review the case, and El-Hadad finally could claim victory Q&A: 1. Identify and briefly describe the legal protections that “whistle blowers” have in the United States.
2. Should U.S. companies integrate legal protections for internal whistle blowers into their internal control systems? Defend your answer.
3. Suppose that during your career you discover a fraud similar to that uncovered by Mohamed El-Hadad. List specific measures that you could take to protect yourself from recriminations by your employer or other parties.
4. Did El-Hadad face an ethical or moral dilemma when he discovered the fraud being perpetrated by his superior and friend? Before responding, define “ethical dilemma” and “moral dilemma.” 1.The Sarbanes-Oxley Act of 2002 (“SOX”) contains significant protections for corporate whistleblowers
2. They should. Internal whistleblowers are likely more vulnerable than external ones, because they are part of the organization system. The chance they are or would beabused would likely be higher because of that
3. Consult to the Whistleblower protection law of the area or under which the organization operates
Request anonymity if possible , and report under confidentiality code.(most likely not possible)
Report to the senior officials in the UAE Government
Discreet involvement
Try not to be obvious
Resign
4. Both . Ethical dilemma is faced when individual faces choices that conflicted with the proper behavior, appropriate acts, what should be done
Moral dilemma is faced when individual faces choices that conflicted with morality References GPO. 2006. Civil Action No. 96-1943 (RWR). Retrieved from http://www.gpo.gov/fdsys/pkg/USCOURTS-dcd-1_96-cv-01943/pdf/USCOURTS-dcd-1_96-cv-01943-0.pdf
Justia. 2000. 216 F.3d 29: Mohamed Salem El-hadad, Appellee v. United Arab Emirates and the Embassy of the United Arab Emirates, Appellants . Retrieved from http://law.justia.com/cases/federal/appellate-courts/F3/216/29/570329/ Mourtada, Iyad. (Unknown). The Fraud Audit . Retrieved from http://www.iiauae.org/pdf/conference_presentation/Iyad%20Mortada-The%20Fraud%20Audit.pdf Kohn, Stephen M. (2012)Sarbanes-Oxley Act: Legal Protection for Corporate Whistleblowers. Retrieved from http://www.whistleblowers.org/index.php?option=com_content&task=view&id=27 http://www.dol.gov/compliance/laws/comp-whistleblower.htmhttp://www.dol.gov/compliance/laws/comp-whistleblower.htm Knapp, Michael C. 2010. Contemporary Auditing: Real Issues and Cases. (Case 8.14 Mohamed Salem El-Hadad, Internal Auditor pp.533) Cengage Learning, 2010 Internal Auditor & Independent (external) auditor Part of the organization internal control
Part of the organization (dependent on salary given by the organization
Higher involvement in the organization
More prone to bullying by co-workers and employers in case of whistleblowing
According to SOX, no anonymity allowed for the fraud reporting (Anonymous whistleblowers are not in compliance)
Easier to charge involvement on fraud, whistleblowers may actually be involved themselves.
Increasingly important (whistleblowing)
El Hadad: Serious Risk
Non UAE Nationality
the opposite side have high influence in organization
Not ensuring protection before action More independent, less involvement
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