FIFTEEN years ago employee fraud was barely reported on. Nowadays, however, barely a week goes by without cases of employee embezzlement, misappropriation of funds and the forging of signatures to name but a few, being highlighted in the press.
Employee fraud can take on many different forms; at one end of the spectrum we have small scale fraud where employees add on a few more miles to their expenses claim forms at the end of the month. At the other end of the scale employees have been known to inadvertently engineer the downfall of their employer; in 1995 Nick Leeson contributed to the collapse of the UK’s oldest merchant bank, Barings Bank.
Studies suggest that employee fraud has risen in excess of 80 per cent over the last two years and the rate is set to rise again in 2008, especially in the first quarter when the expense of Christmas bites hardest with credit and store card bills landing on the doorstep, often at an alarming rate.
Debt is often one of the major catalysts for any fraud, as is the time of year. Christmas time and bank holiday periods can offer unscrupulous employees the opportunity whilst there are fewer staff members in the office as it is commonplace for supervisors to take their eye off the ball during these periods.
How can I prevent this from happening?
The lack of adequate enquiries when recruiting employees often lies at the heart of employee fraud. Employers are recommended to put controls in place to confirm previous employment details; taking up references, confirming qualifications and verifying identity.
Thereafter it is necessary to provide sufficient supervision and identify ways in which fraud could potentially occur in an individual organisation. Once identified, controls must be put in place to limit the authority and therefore the opportunity of employees so as to limit the possibility of fraud taking place.
What if I discover that an employee has acted fraudulently?
Upon the discovery of fraud it is advisable to contact the police, who will assist with a criminal prosecution. It is then extremely important to speak with a fraud lawyer at the earliest opportunity in respect of recovering monies, which may have been fraudulently obtained.
Fraud involving £50,000 or more is on the rise and in such cases it may be necessary to take emergency injunctive action against the employee to preserve assets. This may include freezing bank accounts in order to stop the fraudster from moving stolen assets whilst a civil action is formulated for the recovery of the money.
To arrange a consultation or to speak with a Commercial Fraud or Business Crime Solicitor, please e-mail Farleys Solicitors LLP or call us now on 0845 287 0939.
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