The hard questions employers may confront.

Unfortunately workplace fraud is becoming more common. We regularly field inquiries from businesses that suspect they have a fraudster among their ranks. The million dollar question is what now? Most people who suspect fraud are very cautious partly out of concern they are wrong, and partly in disbelief, that Johnny or Jenny, a person they trusted, have their hand in the cookie jar.

Up front, several key considerations for employee fraud need to be addressed. Once we have the basic facts, the first question is—does the business have fraud insurance? If yes, it is crucial to follow the process in line with the insurance’s terms and conditions. You don’t want to do anything to invalidate a claim. The second question is, if the person is guilty, what is the desired outcome? Not surprisingly most fraud victims are on an emotional roller coaster and find it difficult to answer this question, but they also often change their minds. However, this information is critical to determine the path to take.

Broadly, there are two options available to victims of fraud—legal action and no action. Legal action can be criminal or civil, or both and no action usually means letting the fraudster go quickly, and ideally quietly. How we advise clients to proceed with an investigation is heavily influenced by the desired outcome. Often, at the outset, it is not possible to know what the desired outcome will be particularly if the quantum of fraud is unknown. With smaller frauds that have a low chance of recovery, understandably clients are reluctant to expend the necessary resources to secure a conviction, or file a civil case.

When faced with a potential fraud the most common questions are:

• Do I have to continue to pay the suspected fraudster?
• Can I terminate and/or suspend their employment?
• Can I remove their access to IT Systems?
• What sorts of backup data do I need?
• Will I get my money back?
• How long will it all take?
• How much will it cost?

Unfortunately the answer is often “It depends”!

We can guide you and your clients through the maze of options and considerations. The HR and IT issues are central to any fraud investigation so in next month’s On The Pulse we will focus on the essential IT issues.