WORKPLACE FRAUD
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s much as every employer would love to trust the employees whom they pay every month, the sad truth is that workplace theft is an all too common occurrence. Statistics show that as many as 75% of employees have stolen from their employees at one time or another, although crimes vary in seriousness from petty theft to serious fraud. Theft of product, cash, billing fraud, claiming undue overtime, payroll fraud, claiming receipts for personal expenses and theft of equipment are among the most common forms. Even business partners have been known to help themselves from the till. Unfortunately, theft from employees and associates can break a small business, so it’s vital to be vigilant and pick up the signs before things get out of hand.
The warning signs Sometimes a customer, vendor or employee will tip you off, but often you won’t notice a thing. Here is a check-list of indications that things may not be what they seem. Lifestyle changes. You haven’t awarded anyone a big raise recently, so where did that employee’s new car come from? Work habit changes. Why is the employee who has always arrived late suddenly started arriving long before everyone else and staying much later? New friends. When two employees have suddenly become “as thick as thieves” and are acting a bit strangely, it’s probably worth looking into. Befriending the vendor. Being friendly is good business practice, but an employee who is always favouring a particular vendor with gifts and tokens might have entered into an inappropriate relationship. Absenteeism. When an employee is off work at lot and it’s got nothing to do with something at home, it’s possible the employee doesn’t want to be at work when theft is taking place. 12
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Too diligent. Be suspicious of the employee who is never absent and never goes on holiday. It’s possible they are incredibly dedicated, but it’s also possible they’re covering their tracks by making sure nobody ever fills in for them. Strange cars outside work. If you keep seeing a car you don’t recognize around your business, especially if they’re hovering around a possible pick-up point, write down the license plate and maybe call the police. Cash registers go strange. Look at the till slips. An unusual pattern of refunds or voiding of sales means it’s time to take a closer look. Damaged goods. You know your business better than anyone. When the number of damaged goods is abnormal, you’ll probably find that something untoward is happening. Too many entry errors. Everybody can make an honest mistake with the bookkeeping, but if it keeps happening, it’s a red flag.
What to do A pattern of behavior is cause for investigation but doesn’t constitute proof. It’s very important not to accuse anyone before your investigation yields evidence. Document your proof so that your case will stand up in court. You might want to install video cameras in the stock room, for example. If you have proof of the theft, you can either call the police and have them arrest your employee, or you can follow disciplinary procedure and dismiss. If your employee is arrested, he’ll still be your employee until dismissed – and it is procedurally unfair to dismiss someone who is in jail. Best hold the disciplinary hearing first before contacting the police. Of course, if the crime is very serious, involving arms, ammunition, drugs, or very expensive items, rather don’t take chances and call the police at once.
Crack down on skimming fraud Your employee working behind the counter is diverting cash sales from the register into his pockets. The employee might take cash as a “short-term loan” intending to return it later. Or they might take the money from a sale and gives the customer the merchandise free. Employee discounts can be abused when a customer pays full price and your employee collects the total amount, then uses their employee discount to lower the total amount, pocketing the difference. The best defence against this sort of abuse is your accounting system. Count the cash daily yourself to prevent “short-term loans”, find who is generating “no sale” invoices, count your inventory frequently, and insist on personally approving employee discounts.
DNA – game-changer? According to Monica Hallin, CEO of Vindico Group, “The next big thing in property and intruder protection is advanced forensic marking with DNA. The DNA can be applied as a gel or grease to property and goods for definite identification or sprayed on robbers and burglars during attacks to securely identify them afterwards. This is a modern, inexpensive, easy and efficient security solution, very preventive – the bad guys do not like DNA. In the UK, often a leader in modern security solutions, DNA markers has been used extensively with very positive results – more than 80% reduction in crime, a study shows. I predict that shops, banks, warehouses, etc., but also individuals in many countries will embrace DNA in 2017. It will be a game changer much like CCTV was” (bizcommunity.com).
