THOMAS BUSBY
The recent case of a New Plymouth City New World manager who fleeced almost $300,000 from the supermarket has put the spotlight on fraud in Taranaki.
These two simple steps can immediately add to more than 50 per cent of New Zealand businesses' bottom line, says a leading fraud expert.
A quick search through the Taranaki Daily News archives shows fraudsters are rampant in Taranaki. From fixing the books to fake consultations there are infinite ways to commit internal or external fraud.
A 2006 survey by global audit, tax and advisory service organisation KPMG found 53 per cent of New Zealand businesses had experienced at least one case of fraud. The average loss was $479,000.
Of all fraud cases reported 63 per cent involved sums greater than $200,000.
While most call it fraud, the police simply regard it as theft. New Plymouth Detective Senior Sergeant Grant Coward said police in Taranaki dealt with it on a regular basis.
"The taking of any property without permission is theft. There's no such thing as perks."
Theft in the workplace was rarely reported because people were generally too busy, but police were always keen to hear of any crimes, he said.
"We will always respond to complaints of that nature."
City New World owner Robert Dowman, who spent 17 years in the police force, was a recent victim of serious fraud after trusted manager Clare Strachan stole nearly $300,000.
When he took over the business in 2006 Strachan was already employed there in a senior position.
Strachan had found holes in the auditing system using "creative accounting" techniques which made it hard to trace, he said.
"As things started to become obvious you don't know where to start looking," Mr Dowman said.
The one thing he would do differently was to not have people he did not know or trust in top positions, he said.
"The biggest offence was her breach of trust."
Fraud, theft and securities expert Steve Davis, who has been advising businesses for 25 years, said our trusting nature makes New Zealand one of the most vulnerable nations in the world when it comes to fraud.
"I've been to over 100 countries in the world and have never seen any one so trusting."
He has worked with countless businesses advising them on how to avoid fraud.
"Most businesses have no appreciation of their own vulnerability. Everybody trusts everybody else."
More often than not fraud was committed by the most trusted employees, he said.
"The No 1 prerequisite for successful fraud is trust. It's always the last person expected."
Employers should not feel bad about being suspicious and implementing security measures, he said.
"Trust is beautiful but certainty is sublime."
Business owners could be robbed of serious money because of their complacency, he said.
"They do not do the necessary checks and balances to determine whether anything is going wrong in their business."
Mr Davis operates a toll-free fraud hotline advising people how to avoid being fleeced.
About 85 per cent of calls he receives are regarding internal dishonesty, he said.
A shockingly small number of employees was ever caught committing fraud, he said.
"It's far more prevalent in New Zealand than anyone would ever expect.
"One in every 50 is ever detected."
Once it was detected, fraud was very hard to trace back to the offender, he said.
Most employers who were fortunate enough to discover the culprit chose not to lay charges and more often than not simply fired the person, allowing them walk free and find a new victim.
Too often staff, both new and old, were judged at face value, he said.
Background checks were essential when recruiting but many employers failed to do them.
The next best way to combat fraud was to implement thorough auditing methods, he said.
But many business owners lacked the fundamental skills to determine what their margins were and whether they were being swindled.
"If you don't know how much you're losing you don't know how much of a problem you've got."
Fraud often occurred in collusion between two or more parties, he said.
A good way to for employers to fraud-proof their business was to start thinking like a thief, by trying to find holes in the system.
"Most fraud is committed where the controls are the weakest and the opportunities are the greatest," Mr Davis said.
Hiring a fraud-specific auditor was also a good way to ensure there were no glaring holes in the books.
Most auditors were not trained to identify fraudulent behaviour and were therefore not looking for it, he said.
"Loss prevention is one of the most profitable activities you can engage in.
"Make sure that the checks and balances are adequate and if you don't have time to do it then hire someone."
Fraud was more common now then ever before because of the tough economic climate, Mr Davis said.
"It's not going to go away and it's not going to manage itself."
Mr Coward said if fraud was reported, police would always investigate.
He encouraged people to prosecute because it reduced the chances of other employees stealing, reinforced the seriousness of the crime and set an example to other staff.
Mr Davis's fraud hotline number is 0800 12 THEFT.
- Taranaki Daily News
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