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Issue Date: June 2001 (es)

KPMG's 2001 global

June 2001

As e-commerce revolutionises business, it also revolutionises business fraud. KPMG surveyed the world's largest companies in 12 countries on the topics of e-fr@ud and security-related issues, revealing the following:

A dynamic new company, appropriately named VELOCIT-e, was recently created through the merger of the previous Minotaur Holdings and Power Control Groups, and is now set to provide truly secure solutions for the booming IT industry. The novel name is pronounced 'velocity' and both the definition and the spelling have significance.
Velocity is defined as 'distance over time', and VELOCIT-e intends to take its customers a long distance in a short period of time, or as one of the new shareholders, Dennis Meyer, puts it, "If customers will afford their valuable time we will go the distance!" The IT part of VELOCIT-e should be obvious but it really does add Information Technology to the speed of the service, and the subtle '-e' relates to the well known e-commerce.
The merger came about because the two companies had for some time been working closely together on major IT-security projects to provide a total solution for the customer. One of the more recent of these joint projects was the development and installation of an electronic cashier system for Sun International casinos.
Power Control was a specialist provider of hardware and firmware solutions, while Minotaur added the specialist software required. The merged entity can now capitalise on the existing synergies to deliver end-to-end secure information e-business solutions. The merger was a pure 50:50 deal and the two previous Managing Directors (Charles Laxton of Power Control and Adriaan Graaf of Minotaur) now constitute the new board, while all other members of the senior management team are 'hands-on' shareholders, creating 100% active management control without the legacy of risk-adverse financial investors.
The full range of specialist and business skills
The management team itself possesses the full range of specialist and business skills, and with an average age in the mid-twenties can only be described as vibrant and dynamic, while obviously having a lot of fun in what they are achieving. The company has a staff of 70 in its new premises in Sandton.
Charles Laxton looks after marketing and sales, while Adriaan Graaf has responsibility for new product development. The other members of the senior management team are Alistair Gadd (R&D), Dennis Meyer (standard products and external services), Clive Handley (transactions/security), Kevin Robberts (security) and Daniel Rodich (project management).
Security an increasing concern
While we all tend to take e-commerce as a reality, the truth is that security of transactions is still a major concern, both to customers and service providers. Statistics show that while only 2% of VISA transactions are Internet-based, up to 50% of the total number repudiated are Internet-based. After all, if you buy shares, which collapse in value by 30% in the same day, are you going to admit that you actually knowingly made the transaction when there is no legally-binding evidence that you did!
Let us be honest, most white-collar computer crime is committed on the assumption that the perpetrator is smart enough to get away with it, and here use of biometrics greatly limits such opportunities. While biometrics has for many companies suddenly become the 'flavour of the month', VELOCIT-e has been active in this area for almost 10 years and views itself as the most successful and knowledgeable local player in this field.
Recent project successes
VELOCIT-e has a long history of involvement in biometrics, and in 1996 implemented the successful E-bank pilot scheme for Standard Bank. E-Bank integrated biometric verification and smartcard technology into a then standard ATM. This system is believed to have been a world first and the story made the front page of the Wall Street Journal. The pilot system did away with the already problematic PIN number entry, and included the storage of both fingerprints and a compressed facial image on the smartcard for positive identification.
The pilot system did not go further at the time as the processing power of ATMs then was limited, but the increased vulnerability of ATMs (and use of PINs) and their greatly enhanced processing power may well see a resuscitation of this VELOCIT-e biometric technology.
Biometric options vary
While biometrics is most often associated with fingerprints, there are situations where this is not the best solution, one of these being when a large number of identifications have to be sequentially processed. Manual workers may also have disfigured fingerprints as a result of contamination (eg through grease, dirt or cuts) which can slow down identification.
The VELOCIT-e solution for these situations is equally novel and secure, based as it is on 'hand geometry readers'. Hand geometry is as unique as the fingerprint, but is much more suitable for situations where large numbers of people have to be processed.
Anglo Gold's high security solution
An example of one such VELOCIT-e installation is in the high security environment of a flagship mine of Anglo Gold. A problem with the normal 'ID card' system for workers is that this same card can be used by a friend if the worker wants to take some unauthorised leave.
The use of the swipe card at the access control point will log the authorised user in (for salary payment purposes) but the individual who used it may just sit around during the shift, or even worse, commit a felony. (The card may have been obtained specifically for criminal activity). Hand geometry devices at a clock-in point eliminate this problem as only the authorised person will be allowed access.
As the system is interfaced back into the human resources management system, the company has irrefutable, accurate and reliable time and attendance data. The system could be programmed to allow only those authorised for that shift to be allowed access, or alternatively the records database could flag those not supposed to be in the workings.
Implementing layered security solutions
A similar hand geometry system has been installed by VELOCIT-e at the Government Printer, where it is used to determine access to the highly secure areas where the revenue stamps, blank ID documents and passports are produced. In this installation, entry to different secure areas is limited to specific personnel, so hand geometry allows for layered security solutions. By the way, blank South African passports have been known to fetch up to $40 000 (R260 000) on the black market in certain countries in the Far East, where South Africa is used as a staging post for an individual's escape from oppressive societies.
Pension payment fraud curtailed
One area where government has been the target of massive fraud is pension payments, where 'ghosts' have been collecting payments years after their death. Here VELOCIT-e has developed an innovative approach to the problem, integrating biometric and smartcard technology with vehicle-mounted cash dispensers. The system has already been implemented in the Free State and other provinces are expected to follow their example. The use of biometrics is certainly going to become more commonplace following the decision to use fingerprints as part of the populations' ID documentation. This available data is easily digitised and with modern processor technology will become far more acceptable and reliable that those 'outdated' passport portraits.
Another province which has suffered from fraud is KwaZulu-Natal, and here the Department of Finance (Pietermaritzburg) has also adopted a customised VELOCIT-e solution. Fingerprint and smartcard readers have been incorporated into the terminals used by the supervisors who are authorised to issue cheque payments across their internal network. The issuing of fraudulent cheques has been eliminated, no doubt influenced by the fact that the biometric evidence is irrefutable and employment contracts now allow instant dismissal for offences based on such evidence.
Technology leadership
VELOCIT-e takes pride in its own in-house R&D; and manufacturing capability and it has developed several products to meet the specific needs of the local customer. One of the most successful of these has been its secure bank-approved pin pads which ensure that numbers keyed in at ATMs or other transaction devices cannot be intercepted, as information transmitted to and from the host is encrypted.
While VELOCIT-e does develop its own solutions for many problems, it has no intention of reinventing the wheel, and has thus established relationships with an exclusive worldwide network of business partners who can offer complementary products in IT security.
In terms of fingerprint readers the US company Veridicom has a range of unequalled standalone devices, which use capacitative technology and offer high resolution. For those that have not heard of Veridicom it is one of the successful private ventures of the famed Bell Laboratories, who spent 10 years perfecting the fingerprint recognition technology.
For those customers who need integrated readers, the Irish-based Phoenix offers fully PC-compatible keyboards which incorporate both smartcard and fingerprint readers.
Skytale Data Security Solutions of Hamburg provide the software (with Wizard interface) to provide PCs and notebooks with more sophisticated access using chipcards and biometric traits, instead of the much-abused password. Skytale's FileDisk Protector increases security by storing sensitive data in virtual files, invisible to unauthorised users, and crytographically encoded. Meanwhile the company's LogOn Protector will block use of a PC even when switched on, and in screensaver mode, so allowing the authorised user to leave his desk at any time without concern.
VELOCIT-e has a host of other partners, and space prevents mention of them all. Hypercon in the USA is however especially noteworthy as it is the industry leader in electronic transaction solutions for businesses, a field it has been in since 1978. Hypercon supplies a wide range of smart terminals including point-of-sale devices, with sophisticated e-commerce software that permits secure online transactions. Its IEC 5000 terminal includes all identification technologies in a single device with Hypercon's FastPOS modem technology allowing operation at 9600 bps.
The future
VELOCIT-e believes that it has the opportunity through new developments to play a major role in the rapidly expanding area of IT security. Its local customers will include government departments, financial institutions and large parastatals and it also sees the opportunity to expand its business off shore. The company is in the final stages of development of a product which it believes will revolutionise the e-commerce industry and will guarantee the integrity of any transaction over the Internet.
Clive Handley
Tel: (011) 258 6900
Fax: (011) 258 6939

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