Signs to look for of fraudulent or inappropriate behaviour in organizations

The vast majority of people in organizations, particularly voluntary ones, are reasonable and honest people. But there are some bad apples out there and they tend to be clever and conniving and cover their tracks well. This post is about warning signs when things are not going as they should. Right up front, let me say this, dishonest people are masters at making themselves trusted and indispensable – it’s their main skill. Ask any person in law enforcement who has worked with fraud and they will tell you, the vast majority of offenders (well over 90%) are the people who were most trusted – that’s how they get away with it. It is really important that in ALL cases of dishonest behaviour, you go to the police or appropriate authority. It amazes me the number of times I have heard that organizations have not gone to the police and the perpetrator simply does it again and again. I have heard one case where a dishonest treasurer went through 5 organizations before one reported him. Most were too embarrassed. So I suggest you get this really clear – if they do it to you, they have probably done it to others and if you don’t report dishonesty – they will certainly do it again. Here are some of the signs that all is not right – in no particular order:
  • Receipts are not provided for expenditure;
  • Often excuses are around being too busy, having health issues, or family issues – they play on others’ emotions;
  • Reports not being provided;
  • Reports that are not complete;
  • Not providing evidence of bank balances;
  • Blaming technology for not being able to get information;
  • Last minute inability to attend meetings;
  • Long winded stories about why they could not get something, do something, or provide something;
  • Wanting to be sole authority on financial transactions – this is a huge giveaway of probable dishonesty;
  • Suggesting changes to banking procedures that don’t make sense;
  • Wanting to make changes to bank accounts;
  • Being unwilling or reluctant to show details of transactions;
  • Suggesting that their “friend” will do the annual audit;
  • Suggesting that no audit is necessary;
  • Constantly telling you and others that things are “fine” without giving reports;
  • Coming unprepared to meetings and using emotional reasons for it;
  • Playing the sympathy card;
  • Treasurer being in personal financial difficulty.
  • If a person, particularly a treasurer, leaves or resigns in a hurry or unexpectedly – do some digging – there is likely to be a reason.
If you see any of these things happening, keep a very wary eye on behaviour and events and start asking lots and lots of questions. Demand things like bank balance proof – log on then and there at the meeting to check the bank balance – make sure at least three people have the ability to logon on to the bank even if they cannot all actually transact. The second there is push-back – smell a rat – a guilty person will ALWAYS challenge that you are questioning their integrity – and play the emotional card. An honest person will simply say “of course” because they know that it protects them to be open and transparent. Always, always, always go to the police if you find or suspect dishonesty. Dishonest people thrive on the fact that they are often never reported and just go on doing it again and again. If you do find that your organisation has been the victim of dishonest behaviour, have a robust discussion about pursuing the perpetrator for restitution. It can be more expense, but sometimes it can also be effective. I have been told by police that most of the time, the money has gone on gambling or “lifestyle purchases”, but it may be worth a try. Please remember this – the people who commit fraud are nearly always highly trusted people – that’s their modus operandi – so people who don’t recognise the signs will always discourage you from taking any action. Be objective and lay your observations and facts before them. In the meantime ask lots of questions! Finally – do be careful. Don’t go off without strong evidence. If you ask questions and don’t get answers, ask more questions and write a list of questions for others to see. Fraudulent people are clever and they may “sus out” that you are onto them – so be careful. The last thing you want to do is smear the reputation of an honest person – so be careful.

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