Feature Finance — 15 November 2018

Q & A with Dave Kearns, Managing Director of Expert Investigations, on fighting dishonest employees within the workplace.

Q: How and why did you start your own business?
I worked as a detective and an intelligence officer in the police service for 13 years. During this time, I found that the commercial and legal sectors lacked a proactive, customer-focused resource to help them with their investigations. So 18 years ago, I left the police to set up my own business, Expert Investigations, from the back bedroom of my home.


Q: What was the biggest fraud you discovered and how did you tackle it?
We identified two employees who had stolen £12m. In spite of the amount, the fraud details remained within the organisation even though we investigated it as a criminal investigation. The two employees were dismissed, and I suspect that they still work within the financial sector.

Q: Where is fraud most prevalent?
The Association of Certified Fraud Examiners (ACFE) produces a four-yearly report, which gives a global breakdown of employee asset misappropriation across sectors. However, I believe the information in the public domain is fundamentally flawed because many incidents of employee fraud are never made public.

From my experience, the majority of fraud takes place within the SME sector because the controls aren’t in place to prevent and disrupt dishonest employees.

Q: How do fraudsters typically respond when they have been caught?
They often sit in a comfortable position because they know that they probably won’t be reported to the police as there is frequently insufficient proof to show dishonesty beyond reasonable doubt. It’s then dealt with in the civil arena.

The employee normally resigns or is dismissed. This is hardly a deterrent as the employer has to provide a reference for them even if it just states the date their employment started and terminated. There will be no details regarding the dishonesty.

Q: Why isn’t employee theft/fraud taken as a serious threat to business?
A: I raise awareness of this issue with employers all the time. It’s crucial that boardrooms and senior managers get a grip on employee dishonesty. They need to understand the risks; not only the financial losses but also the damage to their reputation and the low morale caused by dishonesty amongst honest employees.

It’s human nature to want to believe that everyone is basically honest, especially if they’re a trusted employee. Unfortunately, my 18-year caseload shows that employers should consider employee dishonesty a real threat and look at preventing and disrupting it so that they don’t have to detect employee dishonesty when it’s too late.

Q: Which is the hardest to detect and prevent?
When a person has opportunity and is working alone and lower down the employment chain, it can be harder to detect. The dishonest person will frequently have autonomy across a number of business sections, and suspicion typically falls on a number of individuals.

Q: How do you prevent employee theft/fraud?
The potential for employee dishonesty is drastically reduced within business environments where there’s a higher chance of detection and the consequences are severe. The likelihood of employee dishonesty is significantly higher where the probability of detection is minimal as are sanctions and there is little or no action taken by the employer to detect it.

Q: What advice do you have for SME owner-managers?
Position yourself to prevent and disrupt employee dishonesty so that you don’t have to detect it. I offer a practical three-tier approach to tackle employee dishonesty: a senior management seminar; showing how and why employees are dishonest and the impact on your business and colleagues. This is followed by a gap analysis, highlighting the vulnerabilities of the business to reduce the opportunity for dishonest employees. Finally, I provide training so that when suspicions are raised, you can secure and preserve the evidence immediately.

Q: What do you do to relax?
I enjoy extreme high altitude trekking and I’ve done it in the Himalayas, Africa and South America. As a former rugby player, I keenly follow rugby union. I am dedicated to my family. I spend a lot of time with them and enjoy trips to the theatre and other outdoor activities.


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