Ever had a trusted employee rip you off? When I spoke with a bar owner last week, she was still in shock after uncovering a six-figure fraud carried out by a 'trusted' manager for more than 4 years. I hope that doesn't sound familiar.
Most people who commit fraud against their employer are not career criminals. The vast majority are trusted staff who have no criminal history and don't even consider themselves lawbreakers. Donald Cressey, a criminologist, calls it the Fraud Triangle. He says there are three factors that must be present for an ordinary person to commit fraud: Pressure, Opportunity and Rationalisation. Think about how this could apply at your business:
• Pressure comes from a 'non-shareable' financial problem that can't be shared or solved in a legitimate way. It might a drug or gambling addiction, desire to impress friends or problems with a loan that must be repaid urgently. Non-shareable problems involve some sort of embarrassment or shame. They threaten the fraudster's status as a person who is trusted by others. In almost every fraud case, their financial problem relates to gaining or maintaining status.
• Opportunity arises when the fraudster sees a way to use their position of trust to solve the financial problem, knowing they are unlikely to be caught. Think of all the opportunities that arise with money handling at your business: balancing the cash against the till readout, counting cash, making up floats, 'correcting' over-rings and errors. Lax stock-control with liquor or expensive food items gives plenty of opportunity to trade these items for cash. Most hospitality businesses offer wonderful opportunities for fraudsters, with little monitoring of warning signs and sloppy cash control systems .
• Rationalisation is the third part of the triangle. Cressey says most fraudsters are first-time offenders with no criminal record. They see themselves as ordinary, honest people who are caught in a bad situation. This lets them justify the crime to themselves in a way that makes it acceptable or justifiable. They may say they were 'just borrowing it', felt they were entitled to it, had to look after their family or felt they were being underpaid and therefore deserved it. Sometimes they feel the employer is dishonest and should be 'sharing the spoils'.
