Business owners need to be able to trust employees
By Dennis Sanders – Crombie Lockwood Manager, Christchurch
OPINION: There has been a significant rise in the number and value of large scale employee theft claims during the past few months. A quick scan of the local news will show just how prevalent these types of criminal cases are.
For example, earlier this year the office manager at a Christchurch firm was convicted of regularly stealing from her employer. Over a five-year period from 2008 to 2013 she defrauded them more than 60 times to steal a total of $196,742.
The crime was only uncovered when the office manager went on holiday and the owner's wife filled in to discover the company owed $100,000 in unpaid GST to Inland Revenue.
The owner was quoted that because he had been betrayed by someone he trusted for so long, it had become difficult for him and his wife to trust others.
The couple isolated themselves from their friends, were forced to delay their wedding, and had to put their two year-old daughter into childcare full-time so his wife could take over the office manager role.
Even worse was the story of a 41-year-old consultant who stole $472,000 over a period of four and a half years.
She then tried to excuse her offending by claiming she was suffering from post-traumatic stress disorder following the Christchurch earthquakes.
However, a third of the thefts had occurred before the earthquakes.
She was sentenced to three years and 10 months imprisonment and ordered to pay $50,000 in reparations.
The business was unable to recover most of the money stolen.
Employees steal for multiple reasons, common ones include supporting drug or gambling addictions or paying off debts.
Typically most cases of theft do not occur out of any need, but simply because of opportunity or as a form of "compensation" because the worker feels poorly treated.
A common rationalisation is that "the business is making heaps of money and I'm only taking what's owed to me for my hard work".
It is not necessarily just in the realm of the lower-paid workers either.
Research shows that theft can happen in all areas within a company with a trend towards higher sums and more sophisticated methods at the upper management levels.
Without the proper cover in place these losses can be severely damaging to a business especially for small businesses' operating to tight margins.
Even if you have an existing fidelity insurance policy it might not be sufficient to protect against larger scale fraud and we recommend you check the limits.
A comprehensive policy will also pay for claims preparation, auditor's fees and the cost of recovery.
The good news is that insuring against these risks may cost less than you might think and can often be incorporated with existing business insurance policies with minimal premium increases.
Of course prevention should always be the first line of defence.
These include proper pre-employment background checks, installing surveillance systems wherever cash or stock is handled, never allowing one person to manage the finances without oversight, regular auditing and encouraging whistle blowers to speak up if they suspect anything.
Finally, it is important to make clear to your employees and managers that any suspected fraud or theft will be reported to the police, and where proven, will be prosecuted to the full extent of the law.
Source: http://www.stuff.co.nz/business/72516792/business-owners-need-to-be-able-to-trust-employees