Recruiting safely to reduce the risk of fraud

Recruiting the wrong member of staff could cost your business thousands and even millions if that employee goes on to commit fraud. In this article we offer advice on how to make sure you get the right people onboard.

With the average recruitment spend per person hitting at least £2,000, you can be sure that employing the wrong people will affect your bottom line. Add to this the cost of management time and training and it’s becoming a very expensive process.

However recruitment and training costs could be the least of your problems. Recruit a dishonest member of staff and you could find yourself out of pocket in a big way. Employee fraud costs the UK an estimated £40 million per year, according to the UK’s Fraud Prevention Service, CIFAS. Worryingly, KPMG’s Fraud Barometer revealed that insider fraud committed by management or staff accounted for over half of all fraud coming to court in the first half of 2006.

The MI5 website warns employers to protect themselves from external threats as far as possible when recruiting. “Some external threats, whether from criminals, terrorists or competitors seeking a business advantage, may rely on the co-operation of an insider. This could be an employee or any contract or agency staff (eg cleaner, caterer, security guard) who has authorised access to your premises”, states the site.

While this all sounds rather alarming, you might want to take some comfort in the fact that even the police get it wrong. Her Majesty’s Inspectorate of Constabulary (HMIC) recently admitted that it needed a national framework for vetting new recruits to make sure criminals don’t become officers. This follows a report which highlighted 40 cases where unsuitable applicants had been employed by the police.

The good news is there are simple measures you can take to help make sure your business recruits the right people.

Recruitment advice – how to make sure you’re not conned

1. Your business should have a structured recruitment process that tests applicants in aspects of the role. It is also important that all recruits are put through the same process to ensure consistency.
2. Objective assessment methods, such as ability testing or personality questionnaires, can help businesses to shortlist the most suitable candidates
3. Go through CVs with a fine toothcomb. Check the identity and address of every employee. Confirm their full name, date of birth and address with supporting official documents (eg passports or photo driving licence). MI5 advises that you don’t accept the following as proof of ID: duplicate or photocopied documents; an international driving licence; an old British visitor’s passport; or a birth certificate issued more than six weeks after birth.
4. Make sure you get any potential employee’s National Insurance number or other government-issued unique personal identifying number, such as a National Health Insurance number.
5. Take up any references from schools, colleges, universities and previous employers (again insist on originals) and check with the originators that they are genuine.
6. Get full details of previous employers (name, address and date) covering at least the past three years.
7. Get proof of the right to work in the UK if relevant. For European Economic Area (EEA) nationals, ask to see their national identity card or passport and Home Office documentation confirming immigration status and permission to work.
8. Look out for any obvious gaps and inconsistencies in the applicant’s employment or residential history.
9. Remind applicants that supplying false information or failing to disclose relevant information could be grounds for dismissal and could amount to a criminal offence.
10. Remember you can use Criminal Records Bureau checks for certain kinds of work.

Vetting contractors and agency staff

Your IT support people, security guards, cleaners, catering staff together with any other outside agency staff you employ can also expose your business to extra risk. Some agencies may be careful in their selection procedures, but the less rigorous are open to exploitation by criminals. Use the following guidelines to help your business stay safe.

1. Make it a contractual obligation that contractors validate the identities of their staff and monitor this regularly.
2. Make sure that your contractors are part of a recognised professional organisation responsible for accrediting standards in that industry.
3. Confirm that the individual sent by the contractor or agency is the person who actually turns up. · Provide photo passes to contract staff that have been authorised.
4. If possible, supervise contract staff whenever they are on the premises and particularly if they have access to sensitive areas
5. Nominate a permanent member of staff to be responsible in personnel terms for contract staff.

Tackling security among your existing staff

Of course, it’s not just new recruits that can open your business up to security risks it could be somebody already on the team. This is why it’s a good idea to encourage managers and staff to be alert for anything unusual in employee’s behaviour. You also need to make it easy for staff to discuss any concerns they might have confidentially and informally.

In December 2006 KPMG set up a new confidential fraud hotline for employees called Ethics Line. Staff can call up Ethics Line and raise concerns about possible fraudulent conduct in confidence.

“Colleagues sometimes suspect that fraudulent activity is going on but are reluctant to report or ‘blow the whistle’ due to lack of confidence in internal reporting systems or fear of victimisation or retribution,” explains David Luijerink, director at KPMG Forensic. “Statistics suggest that up to 50% of frauds are discovered following an employee blowing the whistle.”