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Watch on your employees! New ways to curb fraud

Friday, 30 April 2010, 02:49 Hrs   |    51 Comments
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Watch on your employees! New ways to curb fraud
Bangalore: Have you ever committed a fraud? Have you ever received more money than you should and have kept quiet about it? Have you asked for more compensation than you have spent, just to get a bit of more cash? The recent survey by KPMG on Corporate India has brought to light that almost 75 percent of all fraudulent activities in the corporate sector, except Intellectual Property frauds, were perpetrated by employees. The Satyam Computer scam has managed to taint the reputation of Indian IT industry and it took some time and persuasion to bring things back on track. This is a serious problem creeping up in corporate world and must be solved as quickly as possible, to be considered as a global player in IT industry.

An entrepreneur or CEO of the company knows an internal fraud can damage the foundations of the company. But the problem in India is, do the owners of company even realize that frauds are taking place in their company. Most of them have no clue about it and don't have necessary tools to find out about it. Here are a few set of things that CEO's should do to ensure that their company does not have a leak-hole somewhere, as reported by Patrick Stafford of Smart Company.

Video Surveillance: Many BPOs who are working for banking processes have learned it the hard way after being hit by frauds done by employees. 24x7 video surveillance of the employees will ensure the record of each and every activity done by employees.

Spyware: Yes, Spyware is a threat to the system but not for those who know how to use it to their advantage. There are a variety of programs that can be installed on computers designed to monitor exactly what people are doing, even in real-time. Other programs such as key-loggers record every keystroke, while firewalls can even inspect emails for any sign of suspicious activity. "The USB stick is small, you can just put it into a computer, and within 60 seconds it downloads a program onto your desktop and then I can remotely view your desktop at a different computer without you knowing," said Josh Pennycott from surveillance equipment retailer Eye Spy.

Internet banking safeguards: Giving one person the authority to manage the salaries of all employees is a risky move. Different software should be used to figure out who is accessing the banking programs and what is being done.

Internet usage: Every single website your employees visit can be monitored and logged, along with every download they make. Browsing software usually tags this information as default, but employers can add to that by making regularly inspections and records of sites being visited.

Data logs: Many CEO's don't know that they check out what websites users are visiting and many other records can be made available. Emails, chat transcripts, logs showing access to certain data systems and detailed call lists is all available for scrutiny if they decide to look for it.

Keycards: Keycards are an easy way to keep a tab on what time an employee comes and goes and which areas he has accessed and should be the first priority of CEO's.

Automatic alerts: Most electronic systems on computers, and other systems such as electronically-monitored doors, cars and GPS systems, can be set up with notification systems. If someone gains access, a report is logged and you can see who was tampering with what, and at what time.

Bag searches: Random bag searches are very crucial as well. When CEO's are spending so much on infrastructure, the last thing they want is to find that things are missing from office. More than that, few people might write down crucial information on paper which might be of monetary value for others. Many companies have successfully implemented such programs by putting up signs saying "you may be subject to a random bag search".

Whistle Blower System: Not everyone is a fraudster in your company, but almost everyone will be scared to blow the whistle when they see the fraud. As a CEO, it is your responsibility to ensure that whistle blowers can expose fraudsters without anyone knowing about it.

The idea behind these measures is to ensure that your employees must get used to working in an environment where everything they touch can be logged and most importantly, they are aware about it.

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Reader's comments(51)
1: We are leading detective agency, Experienced in all kind of Spying /surveillance,Ppl called us first kind of embedded Detective!Because we develop our own system to meet individuals requirement, Our trained professional investigators are retired from Top investigation agency(s)& we hire international detectives sometimes. we undertake all type of assignments Commercial /Legal/ Domestic. CAP Detectives Maya Puri New Delhi
Posted by: Capt Arora :solutiononline@rediff. com
Posted by:Cap Detective - 04 May, 2010
2: interesting and worthy info as audits do take care to some extent
Posted by:prabhu rama krishnan - 03 May, 2010
3: A very good article quite informative and useful
Posted by:vichoo nair - 02 May, 2010
4: All the above measures are already in use in most of the companies, whether BPO/IT/Banking etc. There is nothing new that is being said here
Posted by:Rider260 - 02 May, 2010
5: In a developed country, you can be put in jail for using these tactics (which are silly anyway).

And I don't believe KPMG which takes money (bribe) and gives quality certificates to companies. Is KPMG trying to say that the employer is all clean?
Posted by:What\'s going on, KPMG? - 01 May, 2010
6: The essay will be an annoying part to employees But as a buisness CEO he has to take care of fraudulent things If we start suspecting and puting everyone in scanner it may seen negatively by the employees Even the scanner part is not going help any fraudulent things only recruiting a perfect employees with positive and trust worthy attitude can help any CEO The CEO are the main culprits to know the buisness secrets of the competitor they bribe the employees and the same is repeated to them If the employees are made part of the company by shares which most of the corporate do will stop such fraudulent to an extent. The employees know who does the fraudlent but most of them keep mum and not expose it. This is the advantage which helps most fraudulent, Hence the employees who are sincere and want their company to prosper be a whistle blower it is their responsibility
Posted by:S A P Venkatesh - 01 May, 2010
7: A good school boy essay.
Posted by:Dasara - 01 May, 2010
8: Dear,
your subjected topic is excellent also perusal of remidies against fraud is also appreciable.
first of all our indian mentality is not strict habituated to allow all excuses and frauds.indian mentality is very crucked and seeks all fraud earnings.
I options, First of all indian attitude shall be changed rather than finding fraud tracking solutions.i also recomnds for revision of indian laws.
Posted by:suvarna - 30 Apr, 2010
9:
Lets stop telling this first because atleast you are a honest and sincere one.
We actually have crossed the limits of creating self respect and discouraging others to cross the line of respect by being moral and create real respect for themselves.
Saurabh Replied to: suvarna - 14 May, 2010
10: If Employees are doing fraud it is possible to track it down with the latest technologies. How can we track if CEOs are doing fraud like one that happened recently.
Posted by:VMD - 30 Apr, 2010
11: This article looks like a school boy essay.
Posted by:Amith - 30 Apr, 2010
12: The economy frauds committed by the employees are increasing, these are because the employees selected by the company on the basis of their intelligence and capability and not on the basis of their family background. Family history is more important as a child from honest family background is less liable to commit fraud.
Posted by:P.S.Thakur - 30 Apr, 2010
13:
This is a completely baseless statement.
Family history has almost no bearing on people's behaviour at work or their propensity to fraud.

"Family history is more important as a child from honest family background is less liable to commit fraud."
Can you please substantiate this?

Besides, how do yo suggest that people find out about employees' family history and whether there is a propensity to fraud in the family (which might or might not have come to light?
Kaushik Replied to: P.S.Thakur - 01 May, 2010
14: I am not surprised that 70% of the employees are performing fraudulent activities. here are some statisitcs regarding interent usage by employees http://blog.cyclope-series.com/2010/02/internet-usage-at-work-%E2%80%93-statistics-for-2009/
Posted by:Anelly - 30 Apr, 2010
15:
Again, a correct statistic being used for the wrong reasons.
Internet usage can, by no means, be considered a fraud, unless one is using the same in performing illegal activities.

This just goes to show that some useless managers are micromanaging and want to control every moment of their employees' time. It brings out their insecurity.

It rests on a faulty belief that if someone is surfing the Net (whatever it is for), he is not doing his work properly. This is the factory-foreman mentality where factory workers' output is based on time. This is not applicable to most new-age industries.
Kaushik Replied to: Anelly - 01 May, 2010
16:
Dear Mr Kaushik,
If you would note ,the company pays salary for a month that means they pay for the employee's time.And using internet and browsing net during those hours of serving the company is a double cheating on the company first the time is invested in other then the hired purpose.Secondly the internet itself is an expense to the company. The nearest internet usage can get is surfing to learn or do duty relevant surfing.
Your statement is only a little relevant when the person is just paid for the work he is supposed to deliver but that too cant be considered as a sincere act.Even in the eyes of Finance department as also from the HR department.
Saurabh Replied to: Kaushik - 14 May, 2010
17: if CEO / employee want to cheat the organisation, some how he will cheat the organisation, by the time the organisation trace the fraud it will be too late eg. two / three incidents in Wipro. even after they have process in place. the best part every year they need to reshuffle the top management and bring young talent people.
Posted by:nagaraj - 30 Apr, 2010
18:
but management should have a spy on the employees who are working well which will make them different from other employee who are not working...they should be rewarded.....
Rahul Replied to: nagaraj - 30 Apr, 2010
19: What a stupid article,so according to the person who wrote this article very employee has to be looked upon like a criminal,monitor each and everything he does. Oh this reminds me of a place where they do such things PRISON.
I am sure the Indian CEO's are smart enough to not to carryout these dumb suggestions,this would eventually kill whatever loyalty that is left in the employees and also make them far less productive.Silicon India should think twice before publishing these type of articles
Posted by:Deepak - 30 Apr, 2010
20:
You are slightly right when it comes to the concern for the hard working employees but what about the dishonest coworkers.
Dear it was always like this Grains had to bear pain for cleaning off the insects from among them.
Well then there are individual reqards which come to them too.Isnt it a balancing act.
Well still there should be some better methods devised but till then companies need safe process and services delivery which keepthe company running because revenue are the base to continuity i guess.
Well hope there shouldn't be arguments in case of safety and continuity.
Saurabh Replied to: Deepak - 14 May, 2010
21:
Its always an employee who gets treated badly and always at receiving ends and why not a CEO, Middle level and Top tier Managers be scrutinized for money laundering. Disproportionate greed and non accountability is a factor in most indian companies where "Who has to bell the cat" and who is responsible when hell breaks loose such as mass exodus of employees from a great companny. People who cannot
lead or have leadership skills need to be spied and chucked out from an organization, whereas they enjoy all the luxury and comfort becoz of licking Manager's ass while the worker class or so called Developers/ hard working elite guys in IT and anybody who works hard are always scrutinized rather than scoundrels who does not do any work and guys who use office as a place to chase girls, harass women and guys who use women as pawns for offers need to be checked.

This article on how to spy on employee should be reworded as how to write articles like this to spoil this forum and he can be black listed from this forum until further notice and it is better for the culture of IT.

Can Silicon trace this user and ask him to restrain his thoughts of vigilance / anti employee activities to himself rather than making it public to boast his knowledge.
Akshay Replied to: Deepak - 30 Apr, 2010
22:
Agreed.
Two options are here
1. You don't trust a person => don't hire him.
2. You put all these in you company => Declare that there is nothing like trust in your organization. (No subordinate trust, no manager trust, no CEO trust, no marketing trust)

Amit Agrawal Replied to: Deepak - 30 Apr, 2010
23: This approach will be a penny wise and pound foolish for corporates. This approach surely has capacity to demolish the foundation of any organization - the people. Systems can never be clever than a human brain. Behaviour of an employee is largely affected by the company culture and the treatment he gets from his boss. Fraudsters are mostly very brillient brains with lot of energy within them. So CEOs, rather than wasting their resources in spying the poor employees who may barely steal a penney, shall better work on moulding this energy in desired shape. That will yield better results and will not require spying in any form.
Posted by:Mandar Joshi. - 30 Apr, 2010
24: Thank you for those tips- thats brilliant article!..for CEO's & all higher ups..
But, do you also have any tips for the employees to find if there are any mis happenings with their working organisation & may be in their higher up's for the knowledge & for safe guarding the jobs, protecting themselves from any kind of threats..
Thank you
Pavan
Posted by:Pavan - 30 Apr, 2010
25: We are leading detective agency, Experienced in all kind of Spying /surveillance,Ppl called us first kind of embedded Detective!Because we develop our own system to meet individuals requirement, Our trained professional investigators are retired from Top investigation agency(s)& we hire international detectives sometimes. we undertake all type of assignments Commercial /Legal/ Domestic. CAP Detectives Maya Puri New Delhi
Posted by:Capt Arora - 30 Apr, 2010
26: The people who believe in such things actually don't believe in their employees. CEOs and top management should concenrate on refining the process and stop doing the work of a police. Each employee should be made aware of the consequences and if any rules are violated actions should be taken in such a way that it becomes an example to others. It is not very healthy doing surveillence or question the integrity your employees who toils for the company growth day and night. We talk about transparency, but never make employees part of our process. Taking a bottom up approach in making such strategies will definitely help.

Cheers
Dhrub
Posted by:dhruba - 30 Apr, 2010
27:
i agree with u.
fallu Replied to: dhruba - 30 Apr, 2010
28: The rain water finds its way towards the sea no matter how big the obstacle is.

One has to curb his intent and be truthfull towards his duty, only then will the frauds vanish.
Posted by:Kunal - 30 Apr, 2010
29: Most of the frauds / pilferage is done by top level people especially in a large organisation as it goes unnoticed since they are their own authorised signatories. Nobody is there to police them & even auditors are hoodwinked as everything will look like it is within the purview of the organisations policies. So only the subordinates will know the fraud but out of fear they will not report it to the higher authorities. In many cases the higher ups & fraudsters will be hand in glove with each other.
Posted by:sesha - 30 Apr, 2010
30: Tips given are excellent in surveying the wrong doings of the employees. As all mentioned, frauds which has got greater implication on the company is done by Senior Management of a company and these survelience will not capture them as they are the one who will be implementing all these.

When you are suspecious about the employee, it is equally important to trust them. It is also cricial for employer to be transparent in their dealings
Posted by:Ravishankar - 30 Apr, 2010
31: Most frauds of large scale are perpetrated by the top management, monitoring lower/middle level employees is like using the inverse of the 80/20 rule. Most of the controls in place can be altered/halted or removed by the top management when they wish. So the key question is how do we stop lets say, a CEO from conducting fraud? The controls suggested in this article do not address that.
Posted by:BenB - 30 Apr, 2010
32: I hope the above ways give relief to an entrepreneur or CEO of the company but to what extent?????? There is a solution for the same. We suggest going with THIN CLIENT. wherein an entrepreneur or CEO of the company can monitor the employees through the server and also by online monitoring systems. the movements of the worker can be restricted and all the important data can be stored in the server and cannot be retrieved without authorization. JP Thomas (9985737838, 9849628283)
Posted by:Junnu Jaya Prasad Thomas - 30 Apr, 2010
33: Greed is the route cause for any fraud either committed by management/employee.Until and unless we come out of this mentality any tools will do no good.

This is a classic example of construction of large corporations for destruction only!

Did we face so many challenges in ancient history? Our elders did handle larger businesses of what we have been witnessing today.But they used to take care their employees like their family members.

The day we see, inclusive growth, we can get rid of all such menace.
Posted by:SARMA - 29 Apr, 2010
34:
I would say it is greed or Revenge (for under appreciation or under compensation or public humiliation for no fault of yours). There is always double standards when it comes to supervisors and thier subordinates. My policy is never trust management, they never care about you. I am yet to see an expception.
TVM Replied to: SARMA - 30 Apr, 2010
35: Great study, very practical tips and solutions
Posted by:Ashwin Dedhia - 29 Apr, 2010
36: Good to see tis report. But as one of reader says major fraud is done by the management not by the employees. if the empleeys doing it should count as pilfridges not a froud.But major concern about the disstisfaction among the employees is non- diserving candidate get promoted due to pemperd by the senior.so if you want to grow nd run your organisation smoothly not to ignore this factor. because non performance make big hurdle for growing the organisation. As i Faced.
Posted by:Sunil kr. Sagar - 29 Apr, 2010
37:
yes, I really do agree with you Mr.Sagar. To some extent I ahve faced a lot of this in past.
Subhodeep Banerjee Replied to: Sunil kr. Sagar - 29 Apr, 2010
38: Its a very nice info to make them scare who is fraud to a company,,,,,,
Posted by:Santosh - 29 Apr, 2010
39: Fraud done by employees is of very low value when compared with the fraud done by the CEO's,Management him/herself.
It is not the employees who have done the fraud in the above mentioned case - Satyam .
It is the Management committed the fraud.
You have Surveillance for all the processes but it doesn't serve the need.
First make the process transparent and imbibe ethics & Moral values with personal care from top to bottom in the organisation.Attitude of the employees plays a major role.
No-Recognition,Non-cooperation from bosses,dissatisfaction in roles and responsibilities assigned,recognition to the non-deserving people who just pamper the bosses to the heights of illusion makes the employees frustrated in any organisation makes them fraud.Primarily think of basic fundamental scenarios creating this environment in the organisation.Find the root cause of the problem and keep surveillance there.
When the people with us are ethical,then there is no need of surveillance.Such employees should be there with us.India will progress through these people not by surveillance in my view.
Thanks for your patience in reading my view.
Posted by:Subrahmanyam - 29 Apr, 2010
40:
I totally agree with you
sonaliburman Replied to: Subrahmanyam - 30 Apr, 2010
41:
You are almost right but these are the tools to protect fraud by the employees. i remember that employees make fraud with less impact as compared to management.

but i found that employees waste lot of time on chat and sending resume's.

passing their time. offcourse all are not like that. most of them are working but a few bad persons affect the whole environment.

Brijesh Replied to: Subrahmanyam - 29 Apr, 2010
42:
The instances you mention are not fraudulent by any means.

If an employee has time to chat, etc, when he is confident of completing his tasks, what is your problem? Are you jealous of his multitasking capabilities?
Kaushik Replied to: Brijesh - 01 May, 2010
43:
and they get promoted as well...
TVM Replied to: Brijesh - 30 Apr, 2010
44:
Again, you're assuming that an employee who chats is not completing his tasks on time. If that assumption is correct, then the promotion concerns me but if not...?
Kaushik Replied to: TVM - 01 May, 2010
45:
you are absolutely right
chandramohan Replied to: Subrahmanyam - 29 Apr, 2010
46:
i am very much agree with mr. subrahmanyan . the attitude of your boss plays a major role in making the employees thinking about the organization . people get frustrated when criticized by the bosses even doing the right thing . Bosses should not play double role with the person.
Deepak Replied to: Subrahmanyam - 29 Apr, 2010
47:
I agree with you.Above policies should be impemented in each and every organisation.
Deepak Replied to: Brijesh - 30 Apr, 2010
48:
i am agree with it
sohan lal yadav Replied to: Deepak - 29 Apr, 2010
49:
what you are saying is correct Subramanyam....
Shyna Replied to: Subrahmanyam - 29 Apr, 2010
50: Its a good news
Posted by:Ganesh - 29 Apr, 2010
51:
what is this, a showcase of knowledge which is known to everyone
from the author of this article, what's your point, this is known to everyone, say something new I really see ravi shankar's comments so relevant you are talking about the employees read foot soldiers or below Middle management then who's gonna monitor the monitor read Sr. Management where most frauds are taking place
Srikar Replied to: Ganesh - 30 Apr, 2010