Fraud Also Hits Reputation and Complicates Investor Relationship
A global Swiss engineering firm has booked a $100 million charge as the result of a “sophisticated criminal scheme” allegedly masterminded by the company’s former treasurer in their South Korean office. The theft included $31.2 million allegedly stolen by the perpetrator by sending money to his personal bank accounts.
The CEO of the company said that due to the large sums of money stolen and the sophistication of the crime, third parties were likely involved. He also was very concerned about the reputation of the company taking a hit because of the crime. Additionally, analysts conjecture that the theft might complicate an ongoing battle with an activist shareholder.
The former treasurer has vanished and the company is working with Interpol and local legal authorities on the matter.
“If you see something, say something.”
The CEO of the company commented, “In our subsidiary in South Korea, our value of integrity was not being lived by everyone nor was our ‘Don’t look the other way’ approach.” This is a telling statement and a lesson for all companies.
Analogous to the national security mantra, “If you see something, say something.”, we must all promote an organizational culture that encourages employees to act upon their suspicions when something does not “feel” right to them; encourage them to ask additional questions or notify a supervisor. Front line employees are the best defense against fraud, particularly when they are supported by a comprehensive and diligently enforced set of policies and procedures.
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