When staff label their crimes as fraud

Luxury handbags among the telltale signs for miscreant workers who feed a spending habit

PUBLISHED : Tuesday, 23 July, 2013, 12:00am
UPDATED : Tuesday, 23 July, 2013, 10:34am

Want to know if any of your workers are stealing from you? Note what sort of handbags they have.

An investigator friend of White Collar tells how a female boss in the city knew something was amiss in the company. The telltale signs were that all her young staff were toting luxury handbag brands such as Prada, Christian Dior or Chanel. They were too expensive for the boss herself to buy and she wondered how the young women who worked for her could afford them.

While these workers may have come from a rich family or had a wealthy boyfriend, the boss smelt something fishy and hired a commercial detective. The investigation confirmed the young workers were accepting bribes from suppliers to finance their shopping trips.

In another case, a junior staff member went on an expensive cruise that cost more than several months of his salary. This raised the eyebrows of his boss, who hired a commercial detective who found out he had stolen company money to pay for the trip.

Financial problems are always the reason staff steal company assets 
Kelvin Ko, Verity Consulting

According to Kelvin Ko, the managing director of commercial investigative firm Verity Consulting, when an employee has a spending habit well above his or her salary, this should set off warning flags that internal fraud may be occurring.

"Other red flags are that staff have very low morale or keep complaining the pay is too low, or when staff members have serious debt problems and keep on borrowing money from colleagues," Ko said.

"Financial problems are always the reason staff steal company assets or commit other type of fraud."

Besides checking on handbags or staff holidays, the boss or human resources staff should also monitor the leave plans of employees. When some staff put off taking leave for a number of years, it may be because they do not want other people to expose their fraud.

Now, many companies require senior staff to take at least one long holiday of about two weeks each year. This is to encourage employees to have a better work-life balance but it is also seen as a good fraud-prevention measure.

Another tip is to rotate staff through different jobs or let a third party take over some of the duties. This also helps to unveil internal fraud inside a company.

Some companies have now also set up telephone hotlines to encourage suppliers or other staff to report alleged fraud or corrupt behaviour. Some companies have found the telephone hotline keeps on ringing.

These whistle-blower hotlines work on an anonymous basis and many people have been found to abuse the system.

Some companies have said the hotlines have became tools for personal revenge, such as when informants accuse colleagues they dislike or to get at former lovers after a break-up.