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Internal Theft: Unraveling the Threads of Money Fraud

Internal Theft: The Price of Money Fraud

internal theft
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In the retail sector, many larger suppliers will set aside a huge chunk of revenue for the loss of stock. In some cases, this amount is in its millions per year and covers such events as damage on delivery, acts of god, faulty and theft. It also covers internal theft which has been on the rise over the last ten years in New Zealand and Australia.

Joanne Harrison, a senior manager of the Ministry of Transport was convicted of stealing $725,000 from her employer in February 2017. This threat, although serious, is seldom seen in organisations Business Continuity Plan.

In line with our workshop this April, we wanted to give you an example and case study of one of Veritas’ clients which explains the process of identifying and dealing with the findings of the event.

In this example, we’ll call the business Company B. They are a service provider to the education sector. They’ve operated for 5 years and been on a growth strategy throughout that time. It is a family-owned firm that has expanded from the initial 3 employees to now having 17. During this time delegated authorities have devolved outside of the initial investors to employees.

In February 2018 the company accountant alerts the Managing Director (MD) that whilst on paper they are making a good gross profit their overall net profit does not match their efforts and bookwork.

The accountant identifies a number of pro-forma invoices for which payment has been authorised by a senior and trusted employee. It appears that the invoices are for firms that are very similar in name to existing suppliers, however, some of the details including bank accounts do not match.

A discussion is held between the MD and the accountant on how to proceed on a way forward. As a result, the MD rings a friend who is a senior police officer and discusses this matter. The police officer says that it is unlikely that police could investigate this matter in a timely manner (within 6 months) due to other more serious crimes taking priority.

The MD is unsure how to undertake enquires and seeks advice from a Private Investigator (PI).

The PI advises that there are a number of opportunities to investigate the pro-forma invoices which include the following:

  • A forensic search on Company B accounts,
  • background search on the trusted employee,
  • background search on all suspect pro-forma invoices,
  • background search on any companies affiliated with pro-forma invoices,
  • authorised search on bank accounts used and
  • conclusion of enquires including recommendations made by PI.

In addition, the PI gives advice to the company about future prevention opportunities including background and CV checks on prospective employees and using a risk-based approach to future engagement with firms.

From a resilience standpoint, systems and measures can be put in place to ensure a coordinated response is planned out by the relevant teams, activated in a timely manner to allow minimal downtown.

This situation is more popular than you might initially think. Employees who are determined enough to make these criminal decisions are finding other ways to get away with it. We must keep up with the small percentage that may consider it. What would you do right now if:

  • You need advice? Who would you turn to?
  • Who would you notify?
  • What actions would you take initially?
  • What actions would you take strategically to ensure this matter was resolved?
  • What actions would you take strategically to ensure this did not happen again?

With Veritas Investigations, we’ll explore this in more detail on April the 10that our Internal Investigations workshop. Here, our scenario exercise will be the main feature of this event allowing you to be right in the midst of a crisis.

Identical to what we offer our clients on a larger scale across New Zealand & Australia, you will be part of a professionally run training session on how to handle these situations, correctly and effectively.

Contact Us today to learn more

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