A private investigator used by Australia's biggest insurance companies has told an insurance fraud conference how he used his wife to help repatriate tens of thousands of dollars in cash recovered from an Egyptian fraudster to avoid capital movement controls.
A presentation by Phil Peart, a Sunshine Coast-based private eye who specialises in investigating travel insurance fraud, raised eyebrows at the event in Sydney last month, just weeks after the Australian industry agreed to tighten rules on investigators in response to a rise in complaints of inappropriate and unprofessional behaviour.
Mr Peart told participants at the Insurance Fraud Summit 2017 – including serving and former police officers – how he had recovered more than US$20,000 from an Egyptian accountant who had admitted falsifying invoices to defraud several insurance companies.
Related Content
Delegates were shown a photograph of the Egyptian with a pile of cash, which Mr Peart said he had then split with his wife on leaving Egypt and returning to Australia.
Fairfax Media understands the audience for Mr Peart's presentation included Andrew Lawrence, director of fraud, protective security and fraud control in the Commonwealth Attorney-General's office.
Other speakers at the conference included Tony Prior, director of Austrac, the federal body that monitors capital movements in and out of Australia to prevent money laundering.
"You couldn't have picked a worse group of people to say this to," one conference participant who attended the presentation told Fairfax Media.
"This was not a good look."
Asked about the presentation, Mr Peart told Fairfax Media he had split the money with his wife "for safety and security reasons" and because travellers were only allowed to depart Egypt carrying a maximum of US$10,000 each.
Travellers entering Australia must declare cash in excess of A$10,000. Knowingly importing the proceeds of crime is an offence carrying a jail term of up to 10 years.
Mr Peart said he had made a declaration to border authorities on entering Australia but could not recall whether his wife had done the same. He said his wife had accompanied him as a holidaymaker and had not been working for his UK insurance company client.
"I did everything by the book," he said. "This was not my money. I have all the documentation. This was the first and only time this has happened."
Mr Peart said he had obtained a signed agreement with the fraudster under an arrangement that "happened at the direction of the insurer". He said the fraudster had "ripped off multiple companies" a total of £103,000 but his client, which had lost the equivalent of US$20,000, didn't want the man reported to police.
"They wanted their whack back," Mr Peart said. "That was the angle."
Mr Peart said he had worked in the industry for more than 30 years. Allianz and CoverMore, two of the largest providers of travel insurance in Australia, both said they had used his services for several years. Other large insurers did not respond to questions.
Conference participants who spoke to Fairfax Media said no one had queried Mr Peart's methods, although a fraud expert who attended his presentation said it "did ring some alarm bells".
He said Mr Peart had been "naive" to accept cash from anyone in his line of work. "You leave yourself open to allegations of wrongdoing and damage your credibility," the expert said.
It could be challenging to operate in countries with high levels of official corruption but it would still be normal to report to local police the sort of activity uncovered by Mr Peart, the expert said.
He said some insurance companies were "mostly interested in getting their cash back" rather than the ethics or legality of how this was achieved, leading to little active oversight of external investigators.
"The reality is, if you are an insurance company and you don't have anyone internally managing this stuff, you don't have a clue what they're doing," he said.
The industry's peak body, the Insurance Council of Australia, has estimated that about 10 per cent of all claims involve an element of fraud, costing the industry about $2.2 billion a year in 2016, costs that are passed on to consumers in premiums.
The body has since revised these estimates as part of more detailed research, but declined to release the new figures, saying management had yet to approve them.
Other estimates of insurance fraud range as high as $9 billion annually.
Common forms of fraud include obtaining cosmetic surgery overseas that is falsely claimed as an emergency medical procedure, fake accidents supported by forged documents and even false claims of deaths in countries where it is hard to trace people.
In January former Perth Glory soccer player Million Butshiire was jailed for 20 months for his part in a $120,000 travel insurance scam in which he used false medical documents and invoices to support a fraudulent claim he had been injured in the Democratic Republic of Congo.
Unlike the UK and New Zealand, the insurance industry in Australia has no formal structure for sharing intelligence about fraud, making it easier for fraudsters to make multiple false claims on different companies. Many US states have legislation requiring insurance companies to implement anti-fraud measures as a condition of their licences to operate.