Norwegian Fraud Fighter Draws on Decades of International Investigations

Artikkelen ble opprinnelig publisert i The Fraud Examiner (ACFE – Association of Certified Fraud Examiners) mai 2018.

ACFE Member Profile

Erling Grimstad

CEO and Founder

Advokatfirmaet Erling Grimstad AS

Erling Grimstad has enjoyed a long career in the anti-fraud field. Starting out as a financial police investigator, he worked for the Norwegian Serious Fraud Office, headed up investigation and compliance teams in accounting firms and most recently established his own law firm to tackle investigation and compliance issues for private clients. His investigations have spanned the globe and he has encountered a wide range of fraud cases. From his earliest days he knew he wanted to right wrongs in the arena of financial crime. “I got a strong perception of unfairness and injustice,” he said. “That has been my motivation to fight fraud and corruption since.”

How did you become passionate about fighting fraud?

As a young police officer in my early 20s, I was trained in the Financial Police Department to become an investigator. As a young investigator, I was caught by the action and adrenalin; I was convinced that financial crime undermined democracy and counteracted free competition. I feel that financial crime bears similarities with doping in sports — like doping in sports, it is difficult to disclose financial crime.

At the time, the Financial Police Department tackled investigations in some of the biggest white-collar crime cases ever investigated in Norway and I was appointed as head of one of the investigations. The case started with allegations of insurance fraud and theft of crude oil from the tanks onboard a ship. The shipping company specialized in crude oil traffic from Iran to the global market. The company was one of the biggest shipping companies in the world. The insurance company claimed that the stolen oil was used as bunkers oil (fuel) to reduce the fuel costs.

During the investigation and trial, I learned how almost everyone from the shipping company lied in the interrogations with the police and in front of the judge. I remember one of the pieces of evidence we found, burned and in pieces, where we could see pieces from the original records of payments made to all the seamen who participated in the transfer of crude oil onboard the oil tankers. The head of the shipping firm’s finance department admitted that he personally had burned the records. We later found a copy of these records and understood how they had tried to cover up the facts. Thankfully, a whistleblower brought the case to the insurance company, who reported the claim to the police.

Shortly after this case, I was given a case related to one the biggest Norwegian banks at the time. The head of the foreign trading desk was caught for fraudulent actions and embezzlement on Black Monday in 1987. As a result of the fall in the stock markets, he was not able to extend all of his private positions hidden as real trades made for the bank and for clients. He had transferred the proceeds from the criminal acts to a trust in a bank account in Luxembourg. When we were able to prove that the trust was opened by him and that he controlled the bank account, he was convicted for serious fraud and embezzlement.

These two cases convinced me that there was a lot of important work ahead fighting fraud. During the five years after I started as an investigator, I was frustrated with assisting the prosecutors, as they were not always up to speed and did not bother learning the cases in detail before the trial. I started studying law while working as an investigator, looking for opportunities to become a prosecutor. After approximately 11 years as a police investigator, I graduated from law school and started working for the Norwegian Serious Fraud Office. I worked there for almost 11 years as a senior public prosecutor, and the last three years as the Deputy Director and as an Acting Director.

As a senior public prosecutor at the Norwegian Serious Fraud Office, I was heading investigations and a team of police investigators and special advisors. When I ended my career at the Norwegian Serious Fraud Office, I started my own private law firm, working purely on investigation and compliance matters. I have also been the head of the investigation and compliance teams in two different major accounting and advisory companies in my career.

I was very fortunate to get a position at the compliance department of the Norwegian Government Pension Fund Global (NBIM) in mid 2000. I had a position as an investigator in the Procurement Task Force, Investigation division, OIOS of United Nations in New York for a short period. Looking back today, I realize I have been doing the same kind of work from the time I first started as a young police investigator — investigating and preventing white-collar crime.

You’ve worked in both the public and private sectors. What were some of the major differences you experienced switching between those two different environments?

I have experienced many differences between the public and private sector. One obvious major difference is the overwhelming number of cases you deal with as a prosecutor. In the private sector, marketing and sales activity is important when chasing interesting cases.

In private business, everything you do counts and will be considered and scrutinized by the client who pays for your work performance. You always have to plan, execute and inform your client while you are doing your best to advise how to assess risk and avoid any action that might have a negative impact on the reputation of the client. It can be difficult to accept that the client is satisfied and ready to stop the investigation, while you find yourself only conducting 25% of the investigation you had planned for. As a police investigator or prosecutor, you can sometimes go on almost forever, revealing new facts and taking the time you need to find the relevant facts. All this has an impact on how the work is organized, the business dynamic and the culture of the organization.

Another difference is the level of personal threat. I experienced several situations as a prosecutor where I found myself without any real protection, trying to cope with threats from persons who did not appreciate the investigation steps I was responsible for. Even if you are part of a law enforcement system, it is surprising that you find yourself put in situations where you understand that you have to deal with the threats yourselves in the end. So far, I have never experienced any serious threats working on investigation and whistleblower cases in private businesses.

In the police force, it is always about us (the police) against the bad guys. It does something with the culture and the understanding of the business environment out there. Working as an advisor for private business for years, I understand more of the risk approach and the dynamics when you only have pieces of the picture and have to make decisions as you run. It is all about how you understand risk and anticipate how a situation could develop. There are no black-and-white situations, rather gray areas, and in these situations experience helps you make the right ethical decision for your client, while still keeping your own integrity. Working as a legal advisor is much more rewarding than I ever felt as a police investigator or as a prosecutor. I am not thinking of the financial reward, more of the satisfaction from making a difference and influencing business leaders to make a responsible decision based on the understanding of risk, integrity and impact for those who are affected by the decision. There is a lot more I can do in order to prevent and fight fraud and corruption as a private lawyer than I could ever do in the police and the prosecution authority.

What led you to start Advokatfirmaet Erling Grimstad AS?

Before I started the law firm in 2017, I had previously established the investigation and compliance team in one of the big four firms in Norway (2007). Later, I started two boutique law firms in the same business sector before I became the first head of the investigation and compliance team of BDO Norway from 2011. I decided to start my own investigation and compliance firm in 2017, finally developing a business according to my own ideas and in accordance with my understanding of integrity and ethical values, without the bindings and the consideration you have to make as a part of an international big firm. I am closer to my own roots and integrity. I work in an environment where I can assist clients with young and talented professionals who have the same set of integrity where income and money is not the most important motivation for work.

Today, I am using my experience to handle cases of whistleblowers and assisting private businesses with decisions and difficult risks, involving possible fraud, corruption and money laundering. We are working in the Nordic region, and in some cases chasing information worldwide. I have a great network of people, who make it possible to trace information almost anywhere. I have proven that it is possible to work more or less in the same way as I did in a big firm with more than 64,000 employees, being a small law firm using the capacity from my network on a global scale.

To me, this is the future for investigation and compliance services worldwide. You can pick professionals from different countries in projects, including people with different skills in the same projects and provide the best investigation and compliance services there are. This way you will avoid conflicts of interest and the pressure of upselling your colleagues in new assignments for the client. I find that the clients appreciate this and are willing to work more closely together with us than ever before. I even got my own office and car park at the premises of some of my clients. I never experienced this from the time I was working in one of the big firms.

What unique challenges do you face in your position?

It can be challenging when a client suddenly requires you to stop an investigation with no obvious explanation. Some of the experience you gain as a police investigator or prosecutor is the knowledge on how to evaluate evidence. You always tend to look for more pieces of evidence to make sure your assessments can stand in a court. Doubts and afterthoughts on possible events or variables of facts never stop. In many circumstances, it is not possible to gather all evidence or to reveal all the facts. Some people will never tell the truth, and some people will try to trick you. I was rather surprised when I understood that I received more in-depth and trustworthy information doing investigations in private businesses than I got as a police investigator — especially information I sometimes got from whistleblowers. Working as an investigator in the private sector, I found that individuals, especially whistleblowers, trusted me more. Maybe they were convinced that I could help them in one way or another.

Another challenge I have experienced is from numerous cases where we continuously find new and more serious suspicions of financial crimes than the client expects. In such circumstances, I understand that it is difficult for the client to ask us to stop the ongoing investigation.

Another challenge is how to explain to a client why the police are not able to follow up on all cases and investigate a case properly. To the client, their own case is the most important one.

What is a memorable case or project that you have worked on?

One of the cases I will never forget was a terrorist case right after 9/11. We were asked to investigate whether the head of an organization from Iraq, living in Oslo at the time, had been involved in serious crimes. The case resulted in an investigation in Iraq shortly after the Iraqi war started. We interrogated terrorists and possible suicide bombers who were captured before they managed to kick off the explosives they were wearing. We found ourselves investigating the case inside an Iraqi prison where most prisoners were members of terrorist organizations at the time.

A local example is a case I was investigating as a legal advisor for more than three years. We managed to find information that later served as the starting point for one of the biggest corruption cases in Norway. We found systematical breaches of procurement regulations in one of the leaders in a municipal activity. The head of the public service had organized a setup where he ensured personal profit from almost everything he bought as the head of the organization. We later found out that he had invested the money in several farms in South Africa for approximately $60,000 he had gained as personal profit over several years without anyone raising a red flag. The most difficult part was to get the police interested in the case. After a while, the police prosecuted the head of the organization who got seven years in prison. The case revealed important information for all the employees who had suffered for years under the manager. The manager treated many of the employees poorly and pushed some of them into fraudulent actions. The employees who spoke up and questioned decisions from this manager lost their jobs or were forced to participate in fraudulent actions.

To me there is an obvious connection between poor leadership, lack of control and the risk of financial crime. That is why I always find myself trying to sense the impression of the organizational culture of the working place to assess the risk of fraud and corruption.

What is one of the biggest lessons you have learned since becoming a member of ACFE?

The ACFE is a great inspiration and I always find it interesting to read Fraud Magazine and use the training material and products available in my work. I am surprised that there are so many equivalent experiences and perceptions from members fighting fraud and corruption in different parts of the world.

I am aware that many colleagues out there, being ACFE members, face personal challenges with negative feedback by partners or clients who did not get the results they wished for. They also find themselves subject to criticism from those who do not want the case to be disclosed — or even threatened by the bad guys they expose. Being part of the ACFE gives you a better understanding of the reasons why some of this happens to you. It also makes you aware that this might be a part of the challenges you have to face when dealing with cases of possible financial crime where individuals have a strong stake in the outcome.

How has membership in the ACFE impacted your professional development?

The ACFE helps me understand more of the skill set needed when being a professional investigator. The tools available from ACFE have also been a good inspiration when I wrote my own book (in Norwegian only) on how to investigate suspicions of corruption in work relations. The tools from ACFE have also made me aware of the different ways you can handle a case and the networking the ACFE provides has also helped to identify possible partners when doing assignments globally.

What activities or hobbies do you like to do outside of work?

My favorite leisure activities are sailing, cross-country skiing and snowboarding. I sailed my own boat from Oslo to the Caribbean in 2014 and 2015. This was a dream trip I had for more than 20 years. It was an amazing adventure, especially crossing the Atlantic Ocean for 21 days in open sea. If you are able to do so, you should definitely follow your own dream.