Fraud causes heartache and a complete disintegration of trust
I recently shared a story about a former organization being scammed and how that series of events affected my passion for speaking up. I have another story that is even more harrowing as it involved a long term and trusted employee who took it upon himself to run a second set of books within the organization - for years.
This time, not only was this fraud happening over a long period of time, the fraudster directed and encouraged the other employees at this remote location to carry out his fraudulent behavior. The scheme was eventually discovered by the CEO who was making a random visit to the remote location, and happened to open the mail. That discovery led to a fraud of massive proportions and the eventual dissolution of the organization.
Legal fees, and years of litigation and heartache incurred as the gravity of the fraud unfolded. While there were some funds recovered, these essentially found their way to the lawyers and the business was ultimately lost. This lesson was a hard one and we quickly understood that internal controls and processes are essential no matter what the size of your business.
Ensuring regular communications, training, and a strong code of conduct and expectations of behaviors is also essential. Confidential hotlines can make the difference when an employee decides it is time to speak up. Knowing that management has put such a system into place reinforces their commitment to want to hear about the issues and are willing to protect those who have the courage to speak up.
Having been party to witnessing two corporate scams – one less significant compared to the other that completely destroyed a viable business - has led me to be vigilant about ensuring ethics and expectations of behavior are communicated consistently, and that management speaks to these values on a daily basis.
Corporate fraud and the opportunity for exploitation exist in every size of organization so don’t be naïve and think it can’t happen to you. Start putting the steps in place to protect and empower your business.
