These sobering statistics brought more than 60 guests of the LB Business Network together at Howard Kennedy’s offices on 15 March 2018 to better understand how to prevent and combat fraud in the workplace.
- Chair: Louise Bennett, Partner and head of Commercial Litigation, Howard Kennedy
- Joel Leigh, Partner, Commercial Litigation, Howard Kennedy
- Jane Amphlett, Partner and head of Employment and Immigration, Howard Kennedy
- Darren Dackombe, Director, ITDUK
- Michael McNeir, Financial Investigator
The seminar opened with a straw poll of delegates which found that:
- 71% believe that the biggest threat of fraud to their business comes from external attacks.
- Just 6% believing their staff pose the biggest threat of fraud.
- 47% believe they do not have adequate procedures and policies in place to combat fraud.
- 45% believe that their IT systems are not sufficient in protecting their business from fraudulent attack.
Joel Leigh speaking first provided an overview of the regulatory and legislative environment that seeks to protect businesses and provide redress for victims of fraud. He also provided an insight into the support Howard Kennedy offers its clients, particularly in the specialist areas of banking and financial services fraud, property fraud and any insolvency and professional negligence dimensions.
Jane Amphlett followed with an outline of the employee dimension, provocatively entitled the ‘enemy within’. Fraud from employees can and does have a significant financial and reputational impact yet remains a legal mine-field for employers.
Jane offered delegates practical advice on steps that can be taken to reduce the possibility of employee fraud in the first instance. This extends to research and seeking references for new members of staff, having the right policies in place to deal with potential fraud, encouraging a culture of employee engagement and whistleblowing, and, where appropriate, electronic and CCTV surveillance.
It is important, Jane said, to strike the right balance between security and fostering an environment of trust and respect, whilst at all times keeping in mind the requirements of the changing data protection regime and GDPR.
Sometimes, however, prevention is not enough. Employers will from time to time have to address allegations and fraudulent activity from staff.
Typical activity will encompass investigation, possible suspension, disciplinary investigation, possible legal action, police involvement, regulatory reporting requirements for regulated businesses, and managing the commercial fallout.
Often, the challenge facing businesses is whether to suspend straightaway an employee suspected of fraud and alerting them to the fact that they have been caught or allowing them to remain in the workplace in hope of catching them in the act. It will, says Jane, vary from business to business and on the severity of the alleged fraud.
The LB Business Network wrapped up with short presentations from ITDUK founder Darren Dackombe and financial investigator, Michael McNeir.
Businesses continue to make some basic mistakes when it comes to managing their IT leaving them open to possible fraud. Passwords remain all too easy to guess, social media broadcasts to would-be criminals when we are on holiday, public Wi-Fi networks are all too easy to hack, and even the ubiquitous ‘out of office’ automatic response on email accounts allows criminals to confirm email addresses and email security software used. All valuable material for those with criminal intent.
Michael McNeir gave an overview of the confiscation regime in the UK. It is worth noting that it is not just a prison sentence that fraudsters face, but businesses and victims of fraud can potentially recover assets through confiscation orders. Michael also gave an insight into how the authorities tackle asset recovery.
The message is simple and clear: keep IT systems up to date, engage and educate staff and, above all, be vigilant.