Expense Fraud – Is It Really Worth Your Job?

Another tale or two of “procurement” fraud (in its broadest sense) hit the news last week.

The Wall Street Journal broke this story, reporting that some presumably well-paid employees of Wells Fargo bank (ranging from analysts to Managing Director level) regularly placed dinner orders through delivery services during working hours, when food is not a reimbursable expense. They then allegedly altered the time stamps on emailed receipts to make it look like they had been working late and ordered meals that were eligible for reimbursement”.

The WSJ says that after an internal investigation, this “resulted in employees being fired or placed on administrative leave and that caused a delay in bonuses that were due to analysts earlier this summer … Since May, at least nine Wells Fargo analysts and associates have been terminated or have resigned voluntarily…”

This is a sad example of how people will risk ruining their careers and losing well-paid jobs for very little real benefit – maybe a few hundred dollars here?  But I remember when I was European Procurement Director for the Dun & Bradstreet Corporation hearing that in one of the subsidiary D&B firms (not the core D&B business, I should say), two senior marketing people who had only joined a few months earlier got fired. When travelling on business, they were getting their bill from a hotel the night before they left on an express checkout basis, then making a phone call so the hotel had to send them another revised bill later. That gave them two bills – and they submitted them both for expenses.

I mean, did they really think no-one would check and ask, “how exactly can you stay in the same hotel twice in the same night”? Sure enough, their attempted fraud was detected. And just like Wells Fargo, these were well rewarded people, not exactly on the breadline where an extra £100 might make a difference.

Why do people do this – is it for the thrill? Some sort of anti-capitalist protest (“sticking it to the man…”). Or is it just excessive greed? I’ve always had a tiny bit of sympathy for the lowly paid PA or admin clerk who is handling huge amounts of money and gets tempted – but these executive fraudsters who blow their careers for small amount of benefit seems incredible.

Then we had the recent case of the local authority finance manager in London who despicably stole some £60,000 from the fund to support those victims affected by the tragic Grenfell Tower fire. As the BBC reports:

Jenny McDonagh, 39, took cash meant for survivors of the tragedy and victims' grieving family members using pre-paid cards. The Kensington and Chelsea Council finance manager spent the funds on trips to Dubai and Los Angeles, expensive dinners and online gambling.  McDonagh, described as a "serial fraudster", admitted fraud and theft.

She appears to have stolen the money via pre-paid cards provided by the Council. These were offered to tenants of the tower who needed financial support post the fire – they could choose the cards or receive money direct into their bank account. We’ve seen pre-paid cards used and discussed for various procurement related situations, including in the world of social care, but this is the first time we’ve seen something going wrong like this.

There will be questions about how long it took for the Council to work out what was happening, and perhaps controls should be stronger – this will be looked at, I’m sure. But it was detected reasonably quickly, so we won’t be too critical of the processes.

And we come back to our usual best practice advice on fraud – always make sure there are checks and balances, don’t allow anyone to control money with no-one else being involved (however senior they are) and so on. More here if you need a refresher!

Voices (3)

  1. Dave Coley:

    Good points raised by FF as usual.
    That particular NHS example is one I know a fair bit about, and am in the midst of a similar case in a new job – this is more common than we may at first think.

    Analytics to detect unusual activity is definitely the key and although my analytics provider at the time didnt really help there are a few quite sophisticated products on the market that can really help. One in particular I’m in advanced discussions with.

    Could be a good article at some stage Peter.

  2. Dan:

    Not procurement fraud, but I’m aware of one company who called in investigators as they thought one of their payroll staff was defrauding them (creating a fake employee who then got paid).

    Apparently, the investigators not only got enough evidence on this staff member, but also found another employee who had been running, completely independently, the exact same scam.

  3. Final Furlong:

    I have seen it all.
    Organised crime, the Mafia (seriously), fraud, fiddling expenses….usually in plain sight and, often easy to spot, but often taken months, sometimes years, to remove.
    I won’t go into the organised crime or Mafia ones (they were remarkable) but I recall the one at an investment bank where a team came in from another bank, and, in plain sight, channelled and authorised many small orders and invoices to a company owned by a crime family in Essex. When the Head of FM was arrested, he had an illegal weapon in the boot of his car, just in case, one day, the crime family didn’t see eye to eye with him (presumably).
    The NHS has exposed some real gems, and many people get caught because of their arrogance and stupidity (like the person who showed her NHS colleague her new eBay site where she was running a computer consumables business….all of the products originally paid for by the hospital in which she worked…)
    Tech is the key. Smart tech. Usually the data is already there.

Discuss this:

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.