Acting on workplace fraud

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Fraud costs the UK an estimated £52 billion every year.

It’s a whopping amount of waste, with a lot of it taking place in the workforce. In the last few weeks I have seen a number of interesting employee fraud cases hit the headlines, including

Case 1. Afren, the oil and gas company, are pursuing its suspended chief executive and other senior managers for ‘tens of millions’ of dollars in alleged unauthorised payments. Afren have not revealed how much money has gone missing but shares have plunged by third/£600m since revelations came to light, resulting in a significant double loss. What’s more, it’s thought that the act of fraud could lead to company being penalised by authorities.

Case 2. A Fraudster who stole nearly £3m from City firm then frittered away cash on gambling and Thai bride has been jailed for 4 years for an appalling breach of trust. During the court case it was shown that Dennis Harold, 60, swindled Devonshire Appointments, a London recruitment company, over a 14 year period, squandering an estimated 1.2m. The money was procured fraudulently after Mt Harold instructed to paying of wages into more than 20 bank accounts in false company names

According to the Association of Certified Fraud Examiners, it’s the number one source of accounting fraud and employee theft, happening in 27% of businesses, with employees claiming overtime for work not worked, false expense claims and adding ghost employees.

Case 3. It was recently revealed that one in five fraud cases in NHS relates to employees who are carrying out unauthorised work while on paid sickness absence. The next most common reason for NHS employee fraud was the theft or misuse resources, followed by staff altering or falsifying timesheets. It’s surprising that this sort of fraud should occur in the NHS, because unlike other unscrupulous employers, it pays its staff a fair wage, and doesn’t try to scrimp by on zero-hour contracts. Furthermore, the NHS provides good employment terms and benefits, including good sick entitlement period. One plausible reason for the occurrence of employee fraud within the NHS is the pay freeze that has taken place since the 2008 recession, causing resent amongst workers who have also been forced to compromise over pensions and retirement age. These are acts of rebellion but also desperation, as inflation rises, wages stagnate and the cost of living going up.

Fraud is waste, costing companies millions every year. Yet the waste isn’t limited to money, but also a waste of talent, morale, time and ethics. There is obvious greed at the heart of cases 1 & 2, and whilst 3 looks on surface to be another motivated by selfish interests, these is casue for concern for most employers because the reasons why employees step over the line can be due to frustration, rebellion and anxiety over their conditions of employment.

The majority of these employee fraud cases are too severe to resolve the situation through a staged disciplinary process or early conciliation. The end result for many is immediate dismissal and termination of contracts based on gross misconduct. Despite highly emotive fall out from fraud, it is always recommended that the employee refrain from anger or retribution – irrespective of losses incurred – and remain transparent throughout the dismissal period, making a record of any discussion or action taken. Taking an objective stance, and not rushing in, will ensure communications remain clear and all parties understand the reasons why action was taken.

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Elena Boura