Businesses: Beware the corporate fraudsters

Dave Kearns

Dave Kearns - Credit: Archant

Corporate fraud is rising across the UK whilst budget cuts to the police force have seen officer numbers dwindle. What can Cotswold businesses do to protect themselves? Patrizia Rossi investigates

Cotswold businesses - just like any other business - face monumental challenges on a daily basis. Cash-flow problems and access to funding are amongst the top concerns for directors

However, one challenge that isn’t so prominently on the radar is corporate theft/fraud. In 2017-18, UK businesses lost £88m to employee dishonesty, with the average loss exceeding £62,000, according to Action Fraud.

These figures come as no surprise to Dave Kearns, MD of Expert Investigations, a business he founded 18 years ago to help SMEs tackle employee dishonesty. Last year, his team’s evidence hit BBC headlines when Wendy Dillingham was jailed for stealing £260K from her Evesham employer.

Dave says: “Employee fraud can range from claiming overtime for time not worked to creating ghost employees on the payroll. All too often it goes unnoticed and unreported. Businesses think that it won’t happen to them.”

Another misconception is that employee dishonesty only occurs in larger organisations. In reality, Dave has found that all kinds of businesses are vulnerable, “particularly within the SME sector where management is less likely to conduct a fraud assessment.”

Budget cuts are another headache for time-strapped directors having to deal with fraud. A lack of resources has left the police under “significant stress”. Businesses that report an incident to the police frequently find that the low-level offence is dealt with by email or phone.

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Dave adds: “Not every employee that commits fraud should be dealt with by the criminal justice system, but their impact on the business should be considered. Directors shouldn’t bury their heads in the sand.

With this in mind, the Mickleton MD launched the sister business Dave Kearns Fighting Dishonest Employees: It’s time to act, which focuses on preventing dishonesty within the workplace.

“When suspicion is aroused, businesses need to investigate quickly. By being proactive and identifying risk, businesses lessen the opportunity for dishonest employees, financial loss and reputational damage.”

Fraud can involve dramatic losses for a business and in the worst case scenario cause it to go under. So what steps can Cotswold businesses take to protect themselves?

1. Push the issue up the boardroom agenda to put policies and procedures in place quickly to prevent, detect and disrupt fraud/ theft.

2. Conduct vulnerability assessments to identify weaknesses and show the workplace a commitment to tackling the issue.

3. Provide internal training on how to gather evidence that guarantees a dismissal and/or create a file for the police.

Dave believes that meeting and educating senior management is crucial. “Only when their eyes have been opened through one of my seminars, for instance, can simple methods be introduced to drastically reduce the opportunities for employees to be dishonest.”

One example he cites was a Cirencester manufacturer who had been tipped-off that an employee was stealing. An investigation was launched and following a data trawl, the employee was linked to a website where it became apparent that he was stealing to order. The investigation team made test purchases of goods that they had planted, with recorded serial numbers. The investigation revealed that the employee had stolen over £40K of goods and was subsequently dismissed. The police were not involved as the business did not want adverse publicity.

Prior to setting up his own company, Dave served in the police where he specialised in field intelligence. He has advised the BBC on the drama Shakespeare & Hathaway – Private Investigators. In his spare time, he enjoys high altitude hiking.

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