Are there thieves in your companies?

Over the weekend, republic of marites heard about reports of a “trusted employee” of a wealthy scion involved in alleged theft.

Trusted Employee, so goes the Bilyonaryo story, pocketed money that was supposedly for the company’s suppliers. We saw the mug shots and read about an entrapment operation, days of detention, and then of the complaint being dismissed.

Nobody knows for sure – except the people involved – what’s the real story here, of whether or not Trusted Employee is indeed guilty, or if there are other people involved in this wild rumpus.

Perhaps it will be up to the courts to decide who is guilty or not. For now, it would be premature to conclude that we know the whole story just by reading the reports.

But this issue certainly puts the spotlight on thievery and fraud in companies or the suppliers companies deal with.

Public relations

For decades now, we’ve heard of incidents of fraud among public relations practitioners, especially fly-by-night PR companies.

Years ago, there have been PR employees and some contracted practitioners kicked out of multinational companies because of alleged thievery or fraud. One was caught padding the cost of a product launch.

There are other ways of committing such crimes, including abusing miscellaneous or petty cash privileges or audacious embezzlement of funds.

A public relations professional said that in companies, big or small, there are many “positions of trust” and that includes PR. The bosses therefore must be very sure that the people they handpick to be in such positions are indeed trustworthy.

This billionaire’s empire

Even sprawling business conglomerates have become vulnerable to theft by their most trusted employees; in fact, even family members.

It’s no secret for instance that once upon a time, this billionaire’s empire was found to have questionable deals by some of its family members.

One of the companies in that billionaire’s empire was found to have had contracts with suppliers owned by or affiliated with family members. You can imagine the steady stream of commissions and kickbacks. It’s no surprise therefore that for the longest time, that company was always struggling with financial difficulties.

The business grapevine has heard of similar stories in the empire’s other companies, including deals with construction companies also affiliated with family members.

Outside our local conglomerates, there’s also this listed company whose founders split because one of them wanted to corner many of the supply deals for his friends and family members.

Pilferage

In smaller companies such as small and medium enterprises, stories of pilferage are also all too common.

Restaurants or those in the food business, for instance, are susceptible to pilferage.

One meat distributor had to install a GPS system in its trucks to strictly monitor the routes of delivery teams. It was able to successfully address the problem of massive losses due to pilferage.

There are indeed many stories of thievery, fraud and wheeling-dealings in the private sector, sometimes led by family members or the owners themselves. These crimes are often committed in conspiracy with other employees, or unwitting participants.

Such stories are open secrets within companies but talked about only in hushed whispers as some employees wouldn’t dare bite the hand that feeds them for fear they might lose their jobs.

Unfortunately, corruption in the private sector is just as detrimental and damaging as corruption in government, especially if the company is a listed corporation and therefore involves the public’s hard-earned money.

According to Score.org, a non-profit organization that provides business mentorship, employee theft is one of the most serious problems facing small business owners in the US.

It says:

“According to the National Federation of Independent Business (NFIB), an employee is 15 times more likely than a non-employee to steal from an employer, and employees account for an estimated 44 percent of theft losses at stores. The US Department of Commerce reports that nearly a third of business failures are related to employee theft or fraud.”

Misdeeds in companies take many forms, it said, including larceny or outright theft; skimming or diverting business funds; fraudulent disbursements such as inflated expense reports; check tampering, embezzlement of raw materials and taking kickbacks from suppliers.

To avoid such incidents, Daniel Kehrer, founder & managing director of BizBest Media Corp. said in the Score.org article that companies should understand their computer security measures as they might be used to divert money or inventory.

Companies should also track business checks. Always use pre-numbered checks, with amounts and payees typed or written in permanent ink, the article noted.

Kehrer also said that companies should provide a way for employees to report theft or fraud by co-workers.

I would also like to add that companies must also adhere to strict corporate governance and ethical practices. Their board of directors must actively implement measures to promote and practice ethics, corporate governance and regular audits.

Regulators

In the Philippines, corruption, theft and fraud in the private sector don’t often get the attention it deserves.

But corporate regulators should keep a close watch on this dark side of  companies because as I said, corporate fraud or thievery in the private sector can be detrimental.

It can lead to the collapse of companies and when that happens, unfortunately, they can bring down with them their thousands of employees or even a big chunk of our economy. We’ve seen this happen in some local banks in the past.

As for the case of the controversial trusted employee who is now in the news, a source told me, authorities should “look at everything including the interiors.”

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Email: [email protected]. Follow her on Twitter @eyesgonzales. Column archives at EyesWideOpen on FB.