In a Nutshell: Four insights into workplace fraudsters

Cath Everett

Sift Media

Freelance journalist and former editor of HRZone

In a Nutshell: Four insights into workplace fraudsters

By Cath Everett

The majority of fraud in most developed countries occurs as a result of lots of people stealing modest amounts from government and large corporations.

So while we may occasionally read about the multi-million losses perpetrated by individuals, this situation is comparatively rare.

Instead many tens of thousands of people steal £10 – £10,000 every day via activities such as false benefit applications, bogus grants, insurance, local authority or injury claims, using stolen cards and walking away from utility bills or internet orders.

Indeed, fraud-tracking company, UKFraud.co.uk, believes that the widespread deployment of IT systems to manage business processes "often makes fraud easier as fraudsters prefer such faceless processes to dealing with real people”.

As a result, it has just published a guide on how to spot a fraudster in the workplace, complete with warning signs:

1. Dodgy colleagues fall into two key categories

Where internal fraud (ie fraud by staff) occurs, it is most frequently perpetrated by two distinct groups of people. These are:

Young administrative employees, who are “mostly female”. They are usually familiar with the organisation’s systems and administrative gaps and “may be motivated by an oppressive partner or a drink/drug habit”
Male “long service pin” highly trusted managers who are often the cornerstone of the office, but feel that they has been overlooked for promotion, are overburdened with debt, work or family commitments and could be suffering from other pressures such as a gambling, drink or a drugs habit. ‘Keeping up with the neighbours’ also commonly plays a part.

More recently, however, there has been an increasing issue among people in the latter category who feel as if "they have been excluded by social media and know they that are either ‘on the shelf’ or worse sat ‘in the exit lounge’. The psychological entitlement pressures exacerbated by being left technologically behind just become too much."

Therefore, when they are discovered, "people are always shocked that ‘good-old George’ in Accounts would ‘go that way’ – and ‘good-old George’ is often equally surprised to have been caught”.

2. Ignore common myths about fraudsters

There are two major falsehoods with staff fraud that persist, even at some quite senior levels:

The fraudster is the one who doesn’t take holidays. This is still routinely believed, but is rarely the case as fraudsters like to spend time away from the workplace as much as everyone else, presumably spending their ill-gotten gains. Only where the fraud needs to be constantly covered up might such a scenario be true, apparently. An example here could be a need to constantly ‘balance the books’ and ‘explain away the differences’. But the guidance points out: “This is far rarer these days as remote IT system access removes much of the need to be present.”
The fraudster is a quiet loner that people don’t know much about. It may be true sometimes, but generally having a good rapport with others can help with the cover-up. As the guidelines state: “Often fraudsters use their interpersonal skills to good effect.”

3. The role of organised crime

Organised crime is often romanticised as being the activities of ‘underground’ or secretive organisations.

But the guide book points out: “There are preconceptions that this is Mafia-related or part of the new Eastern European zeitgeist. However, there are renowned, high-profile centres right across Europe (and indeed the rest of the world) for organised fraud activity."

These centres include postal hubs, data processing centres or even individual companies from where fraud seems routinely to emanate and it will not be possible to tackle them at a local level. Instead co-ordinated international help is often required.

4. The impact of brushing things under the carpet

Finally, www.UKfraud.co.uk says that many major fraud problems never make it into the public eye because they are regularly brushed under the carpet to avoid potentially damaging publicity. Why?

Even though the best way to deter potential fraudsters is to prosecute them under the full force of the law, the problem is that exposing the situation to public gaze often reveals that organisations failed to discover the situation at an early stage or were unaware of its full consequences until far too late.

As a result: “The delays in deciphering the data or in gathering evidence cleverly concealed in IT systems if leaked into the public domain, would be hugely embarrassing and almost certainly upset the shareholders too. Therefore it remains hidden.”

So food for thought. Maybe old ‘George’ could do with being watched a bit more closely?