Warning signs you’ve got a thief on your committee or board
First up – context and credibility – why listen to what I’ve got to say?
Over the years I’ve consulted with hundreds of community groups and boards on how to have better meetings. Often unexpected issues present themselves when digging deep into the meeting dynamics, and one of them is dishonesty. Not everyone is singing from the same song sheet it seems. Similar behavioural patterns of dishonesty become apparent.
In one particular situation, the concerned board drilled down into a treasurer’s inconsistencies and discovered that well over $100k had, in fact, been ‘stolen’. The bank statements had many unexplained transactions that proved to be fraudulent. (After a year of being as feisty as a bull at a gate, they managed to recover 70% of the stolen money – read end)
How do fraudsters get away with it? The answer is much simpler than you would imagine…
- They’re expert liars
- Often they’re the most trusted people – that’s their deliberate strategy
- They’re masters at making themselves indispensable
Board Fraud red flags and warning signs to watch out for…
- Lots of excuses and long-winded stories for the inability to provide receipts, reports or answers to standard questions
- Playing on other people’s emotions when deflecting questions, or blaming health or family issues
- Blaming technology for not being able to provide relevant information
- Asking to be the sole authority on financial transactions and an unwillingness for others to be involved
- Suggesting changes to banking procedures that don’t make sense
- Suggesting a new bank account be set up
- Last-minute inability to attend a meeting
- They seem to be living beyond their means
- Suggesting their “friend” does the annual audit, or no audit is required
- They appear to be in a state of personal financial hardship due to a myriad of reasons, such as divorce or a gambling addiction etc
- If they leave or resign unexpectedly start investigating why – there could be a reason
- When asked difficult questions on a board, an honest person will simply say “of course”. A dishonest person will not.
What to do if you discover board fraud…
Always go to the police. Fraudsters will keep stealing until they’re caught. If you don’t report them, they’ll move on to other committees and boards and will keep stealing until caught. Most organisations do not report the theft as they’re embarrassed they did not see what was right under their noses. We know of one treasurer who went through 5 organisations before the board went to the police.
Are you likely to retrieve the money?
In most cases, it’s very unlikely you’ll be able to retrieve the funds as most of it would have been spent. With the situation I mentioned earlier, the stakeholders went to the police (which the person did not expect) and with the threat of a criminal record looming, the perpetrator paid back a large portion of the money.
Stick with the facts only and do not accuse anyone until the evidence is irrefutable. You do not want to tarnish the reputation of an honest person.
(Some of) David Julian Price’s qualifications
- Licensed Inquiry Agent & Investigator (licenced by WA Police)
- Facilitator for strategic planning retreats
- Meetings advisor – All aspects of meetings – Chairing, meeting procedures, leadership
- Presentation skills coach and mentor
- Graduate Diploma in Applied Corporate Governance (GIA)
- Company Director’s Diploma (AICD)
- Nationally Accredited Mediator (through UWA)
- Impartial chair for difficult meetings
Board Fraud – Link to online course
If you need expert help on anything to do with meetings (basic, intermediate, advanced or downright awkward) I’m at the other end of an email or phone. I’d love to chat with you.