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Traitor In Your Company

July 5, 2014 0 Comments

Tips from a Private Investigator VIII


Detecting Occupational Fraud

As an employer, understandably you think it is your responsibility and moral duty to empathize with and trust those working for you. Indeed most of the time that makes the most sense. However, as much as this is important, it is also necessary to at least be aware that there is always the possibility that your employees may get involved in deceitful activity under the garb of honesty. Most employers realize very late that there was a traitor operating right under their nose. And the saddest part of all is it often turns out to be one of their most trusted employees.

It is necessary to detect and solve the problem of occupational fraud because it not only costs you thousands of dollars but can also result in confidential company information being given out. This article discusses how employers can protect themselves against occupational fraud by identifying behavioral flags at the right time.

First, it is very important to understand what we mean by occupational fraud. It involves using one’s occupation fraudulently for personal gains. The employee in question might steal company money, sell company property (including secrets), and fabricate financial documents or misuse corporate assets.

Why does it happen?

According to criminologist Donald R. Cressey, there are three factors that might instigate an employee to go down the wrong path. It includes incentive, opportunity and rationalization. The incentive is the factor that drives the person to commit a fraud. The first is the desire to live a luxurious life which requires money. The second possible motivation could be economic distress.

Speaking about the aspect of rationalization, the perpetrator tries to justify his actions. In some cases, he is in dire need of the money. He steals the money secretly with the intention of replacing it later before it is known to anyone. However, he gradually goes deeper and deeper not realizing it.  Second, he chooses to steal because he believes it to be his right. He believes he is not being paid for what he deserves. Finally, he thinks he has earned it.

The third aspect according to Donald R. Cressey is opportunity. The employee in question looks for the right opportunity to commit the fraud. This is either when no one is around or when the fraud controls are relaxed.

Behavioural Patterns That Ring the Bell for You

  • If you have an employee that works extraordinarily hard. You will notice that the person rarely takes time off or works odd hours to complete tasks assigned to him. Also, he or she rarely goes on a vacation. He is planning the whole thing, covering up for it or waiting for the right opportunity.
  • If you have an employee who lives way beyond his means. For example, an employee who finds it hard to meet his monthly budget has recently purchased a pricey car or a luxurious mansion.
  • If an employee is in economic distress. Everyone faces some form of financial crisis. It could be an exorbitant medical bill or a house mortgage. However, there are some who are deep in debt and desperate for money. If such a person is given charge of the cash or checkbooks, you are tempting him to steal.
  • If an employee has specific addictions. It could include substance abuse, alcohol or gambling. These people are always in need of money and they would do anything to get money.
  • If an employee is a real complain box. There might be employees who feel they are underappreciated or under paid and look for other ways to enrich themselves.
  • If there is an employee who becomes suddenly very secretive about his actions and refuses to let anyone else take charge of duties.
  • If there is an employee who is unnecessarily close with stakeholders, vendors and clients.

Indonesia Private Investigation Agency  (IPIA) along with our sister agency  Bali Eye Private Investigation Agency  (BEPIA) are  fully registered Private Investigation Agencies offering private detective and private investigator services to the Private and Business sectors throughout Indonesia and South East Asia.

Our two agencies both conduct out business due diligence assessments in Indonesia. However, we can also recommend Business Due Diligence Indonesia (BDDI). BDDI specialise purely on business due diligence and pre-employment screening, and with an extensive network of political, financial and business experts, and over ten years specialised focus, they are perhaps the leading experts in their field. 

About the Author:

BEPIA's Indonesian Director of Investigations has worked on and directed over 400 cases. She has a Diploma (with distinction) in Private Investigation from the UK, and an Australian Government accredited certificate in Investigative Services.