Remember the last time you sat and listened to a member of management who was upset and embarrassed that one of their employees had stolen from the company. They explained how they felt violated as if that employee actually stole from them personally.
You are sympathetic, but in the back of your mind you are thinking of all the red flags that pointed to these thefts and wonder how this manager could possibly have missed all of them. Or was it the fact they didn’t want to admit to themselves that they had hired a thief? Or the humiliation if others in the organization found out that someone in their organization was a thief?
Day-in and day-out loss prevention professionals see or hear of this type emotion from our managers. What about looking in the mirror—how would you feel?
Have you ever looked at someone in the LP organization and thought to yourself, “Something’s not right?” You get that burning feeling in the pit of your stomach because one of your own is an issue.
Unfortunately, there are times when we need to investigate one of our own. It happens more often then we want to admit. Sometimes we’ll read news articles about such things. Or we might hear it on the rumor mill inside the industry.
Now you start to think back on how those managers felt when they opened up and let out their feelings of being used by their staff.
Where Do You Start?
Nothing changes. All investigations must be detailed, clear, and concise resulting in proof one is or is not involved in dishonest activity. This includes your loss prevention staff.
In most cases these investigations will consume much more time, imagination, and effort. Remember when investigating loss prevention personnel, they understand how investigations are conducted, which requires more time, effort, and the need for more investigative imagination. On the other hand, some of these investigations can point out the “dumbest” of criminals.
In most cases, all the basic indicators are the same; we just seem to overlook them since we work so closely with our own and do not expect it. We seem to have the mind-set that loss prevention personnel are above and beyond reproach. If this is your thinking, you are only fooling yourself. It can and does happen.
When conducting an investigation into one of your own, you must consider anything and everything. As with any investigation, areas in which you focus your time and efforts should be relevant to their line of responsibility combined with opportunity.
In most cases each of the key areas used to monitor interdepartmental investigations can be broken down into two separate scenarios. The first are those individuals that use their personal vehicle, cell phones, charge cards, and other tools for company business. The second are those individuals that have been issued a company leased vehicle, cell phone, charge cards, et cetera. In each case the billing and research would be relevant to one of the two type scenarios.
Following are some of the key areas found to pinpoint issues when investigating one of your own.
Expense Accounts and Expense Reports. When researching expenses, look for excessive expenses or lack of expenses for travel with no justification for visits to the location or locations visited. The padding of expense reports can be anything from gas receipts to meals and entertainment and filtered down to something as small as toll booth expenses. Excessive expense can point you to believe there is involvement with other individuals at a specific location or locations. While this may not be an issue with your company, it can develop into an issue causing excessive trips to these locations without justification, resulting in lost man-hours, expense report padding, and falsification.
Gas Receipts. The padding of expense reports through gas receipts has become easier with the installation of card readers at the pumps. How many times have you pulled up to the pump and inserted your credit card to find the receipt from the previous customer still hanging out of the receipt window? An individual could now use the highest priced receipt to pad their expenses or even worse, just checking pumps for receipts without even obtaining gas. You can review and monitor this by notating the last four digits of the credit card used to pay for the fuel. Over time you will be able to track and establish a pattern if this individual is actually attempting to pad their expenses through gas receipts.
Meals and Entertainment. Meal and entertainment expense padding can be more difficult to identify dependant on your company’s policies concerning each of these areas. Meals need to fall within some company standards, yet receipts are so easy to come by that one can just visit the fast food restaurants and submit receipts at double or triple the price from higher priced restaurants.
Additionally, when reviewing meal or entertainment expenses, does this individual’s position allow them to pickup the tab for other employees? If so, ensure these individuals are listed on the expense and cross-reference to their own submitted expenses to see if they were actually present. Double billing can occur if one or more individuals are submitting expenses for individual meals and no one is cross-referencing those expenses.
Have you ever looked at someone in the LP organization and thought to yourself, “Something’s not right?” You get that burning feeling in the pit of your stomach because one of your own is an issue.
When reviewing expenses and there are no corresponding lodging or meal expenses for out of town trips, it too may point out involvement with other individuals either internal or external. In efforts to cover this type activity, individuals will falsify their mileage records reflecting return trips on the same date and possibly padding expenses for mileage, gas, and tolls. Involvement may become an issue when trips become too frequent and man hours are lost to the continuous visiting of one location that is not justified.
Toll Receipts. Toll booths have become a traveling executive’s nightmare. This too can be an area of abuse due to the amount of time it requires one to wait in toll lines for receipts. Most organizations allow low dollar expenses such as tolls to be submitted without corresponding receipts. This can leave us wide open for abuse. Here again is an area in need of cross-referencing tolls listed on expense reports to mileage logs.
Undoubtedly the most time consuming investigation is cross-referencing expense reports to mileage logs. This cross-referencing is a necessary evil if your company supplies a lease vehicle for tax reasons. This is done to verify expenses listed correlate to mileage listed.
Mileage Reports. Mileage reports failing to correspond to expense reports or weekly recaps as listed above is a very time consuming and detailed review. When reviewing these reports, look for excessive mileage for locations that are less distance than those listed. Use of Internet mapping services with detail mileage information is very helpful in this area.
If your company pays mileage, it is imperative that your company develop a mileage chart for uniform expensing and mileage listings. This is an area that raises higher risks of abuse since no one checks the validity of the trip, if it actually took place, and are the miles listed legitimate. In this situation you may want to look into individuals who make long-distance trips and return the same day. Such trips have proven to be fictitious in the past and are one of the easiest methods of expense abuse. At today’s current mileage rates, it does not take long to develop into a high-loss area due to abuse.
Cell Phones. For company-issued cellular phones, monitor individual billing of your staff and ensure it falls within your companies written procedures. Look for excessive calls to non-work related locations. Here again you may find excessive calls to certain intercompany locations that may signify involvement with internal individuals. This type activity can always be cross-referenced over time with store schedules to narrow down the listing to determine who is being called.
You will also need to watch for short duration calls listed on the billing with longer calls received right after the call. Unfortunately, in most cases the billing fails to show incoming call numbers.
If your company allows business-related calls on personal cell phones to be expensed, ensure you verify some of those calls. The use of Internet phone search services with reverse number search is very helpful in this area. In office settings you may also need to review specific phone records to determine where calls are going.
Availability. If you have an ongoing problem trying to contact and/or track down an individual on your staff, but are not successful, you should question where they are and why. Here is where you need to start researching into expense reports, mileage logs, and phone records. It’s true there are legitimate times when cell phones are just simply out of range. But if you are leaving voice messages or messages at the intended locations, you would think your calls would be returned within a reasonable amount of time. This may not be a primary reason to suspect an issue, unless it has become excessive.
Alarm Reports. It is very difficult to imagine someone in loss prevention would be this obvious, but it happens. Unjustified entries to locations may indicate a problem. In most cases it is very simple for someone in LP to obtain access keys and codes into locations for a number of reasons. This area is one that dictates a very large amount of time to develop into an investigation since you need to cross-reference entries to pending investigations, expense reports, mileage logs, and/or phone records. You will have to prove one is or one is not entering this location for purposes other than those that are job related.
Corporate Espionage. The selling of company secrets to outside sources or your competitors is becoming more and more of a problem with the intense competition in the business world today. There are a number of other-than-reputable organizations out there that are more than willing to pay for inside information to try and stay one step ahead. This may include straight out financial rewards to anyone willing to supply company financial information and/or access information from corporate mainframes. These organizations go out of their way to find the weak links or vulnerable individuals within an organization to approach. They have the uncanny ability of knowing just when individuals are at their weakest and are ready to deliver exactly what is needed to help for the right information. Remember when investigating loss prevention personnel, they understand how investigations are conducted, which requires more time, effort, and the need for more investigative imagination.
Remember when investigating loss prevention personnel, they understand how investigations are conducted, which requires more time, effort, and the need for more investigative imagination.
You really need to know your people and their personal traits to be able to identify when one of your own is in a position of need. Monitoring spending habits can help to pinpoint when the selling of trade secrets is taking place. Always be aware and curious about staff members who become overly interested in areas of your business that do not directly fall into their line of responsibility.
Restitution Payments. Records of all restitution payments must be processed and recorded through your corporate office. Opportunities are presented when checks are sent directly to stores or loss prevention staff members. Ensure your procedures and records can be traced and cross-referenced. By allowing individual locations or staff members to deal with restitution payments, you are leaving yourself open to losses. Ensure court check payments are sent directly to your corporate office in the company’s name. It is very easy for staff members to accept cash payments for restitution that never finds its way back into the bottom line.
Purchase Orders. Never allow yourself to be limited to one vendor. By having more than one vendor you can have a competitive edge on pricing of equipment and services. Monitor those on your staff who are involved in recommending which proposal to accept. If you are matching apples to apples, ensure those involved are accepting the proposals that cost you the least. In monitoring those proposals, be aware if someone keeps approving one specific company even though their prices are not in line with others. This could be an indicator of vendor kickbacks.
This list can go on and on. You know where to look and how to investigate. Investigations have to be relevant to each individual’s area of responsibility and accessibility. Remember this is based on your gut feelings and/or little indicators that have pushed you to believe you have a possible interdepartmental issue. Never overlook any little detail when you’re looking into your own; they know the loopholes and ways around them.
Investigative Resources
When getting down to the monitoring issues or surveillances used when dealing with your own, it becomes an issue of using additional resources.
When investigating documentation such as expense reports, mileage logs, and cell or office phone records, you need to be additionally careful obtaining these documents without raising suspicions. More often than not, non-LP- related departments fail to understand confidentiality and have no reason to know who is being investigated or why. When requesting records from other departments, request groups of individuals versus specific individuals to eliminate any possibility of this information being discussed.
Time and caution should be your mind-set when dealing with this type issue. Never rush or push the investigation just because you are dealing with your own.
Remember your subject is going to be suspicious of everyone around them, and you will need to be overly creative in installing covert equipment and conducting surveillances.
If surveillances are going to be required, you will need additional resources concerning vehicles. This may require rental units or obtaining friends’ or relatives’ vehicles. Be overly creative to help reduce any possibility of being detected. Additional covert equipment may need to be purchased, rented, or borrowed from your peers.
Time and caution should be your mind-set when dealing with this type issue. Never rush or push the investigation just because you are dealing with your own. Complete detailed time-line notes for every step you have taken. These extra steps will assist in prosecution should you choose to do so.
The Interview
You have completed your investigation, and now its time for the interview. As with any other interview, your documentation and evidence should have enough merit to result in a solid prosecution.
While we never really know how the individual is going to react, if you have handled your investigation correctly and documented every step of the way, your interview should be less stressful for all parties involved. When you put it all on the line, the interview should be relatively easy. Yes, you are dealing with someone who may know all the in’s and out’s of an interview, but when they see you are serious, they are usually relieved to let out all the built up stress associated with their misappropriations.
Always remember that the interview is the easiest part of any investigation. What you do prior to the interview—the investigation, documentation, and the manner in which you conduct the interview—will explain the rest of the story.
Your Reaction
Now comes those feelings we discussed earlier. Now it’s your turn to struggle with feelings of embarrassment. Now it’s you who feels anger that one of your own has violated the trust, not only of the company, but of you. Loss prevention professionals, perhaps more than other executives, put a lot of faith and trust in our staffs. After all, we are the good guys who stand for honesty and ethics in the workplace. But, we are also human. Sometimes changes in our lives, whether good or bad, can cause people to make some very poor choices. When that happens, we really question ourselves and makes us wonder what people are going to say when the good guy and the bad guy are one in the same.