The thing with crime is that once you’ve committed one, it becomes a whole lot easier to commit another.
Take someone embezzling from your company. Often they’re in a position of power within your organization and are committing a crime against you. But to cover their tracks, they could well be committing other crimes that drag your business into their illegal activities, such as fraud, perhaps securing contracts in corrupt ways, or laundering stolen money in an attempt to make it look “clean.”
So are you sure you’ve taken a close enough look at everything going on in your business? Are you sure you don’t have a nagging doubt that you haven’t checked out?
What embezzlement means for your company
The act of embezzlement refers to when an employee who has been trusted with company assets, typically funds, takes some or all of it for themselves. It can occur at any level of your company, whether it’s a cashier pocketing small change during a transaction or a senior director stealing millions of dollars with a deeply thought-out plan. Essentially, embezzlement is one of the most common forms of corruption in business –– a serious breach of trust that can cause great harm to your company.
Typical forms of embezzlement include taking cash meant for bank deposits, forging checks, misusing company credit cards, signing off on transactions without proper authorization, and taking kickbacks from clients or vendors, to name but a few.
How crimes can spiral out of control
Jahangir Hajiyev was a top executive at the state-owned International Bank of Azerbaijan where he took advantage of his role as chairman of the board to redirect hundreds of millions to his own accounts.
Not only was this large-scale embezzlement (said to represent almost one-quarter of Azerbaijan’s GDP) – it was also a complex web that involved corruption, fraud, and money laundering.
He funeled money through Europe, via the supposedly respectable Banque Internationale à Luxembourg (BIL). His wife bought vast properties well beyond their means, and family offices and law firms were also dragged into the mire, whether knowingly or unwittingly.
You’d think a man on a salary worth about $70,000 would draw attention for buying mansions, a Gulfstream jet and even a golf club, but these huge red flags apparently went unchecked. So who is to blame? Luxembourg, and buying luxury properties in the UK and France.
Ignorance is not a defense
Hajiyev’s wife, Zamira Hajiyeva, renowned for her lavish spending at upmarket London department store Harrods, maintains that she was entirely ignorant of how the properties came to be in her name, and had no involvement with the wealth with which they were purchased.
Her ignorance in this case seems unlikely, but ultimately, it doesn’t matter whether she was knowingly complicit. Whether knowing or not, her assets were deemed to have been fraudulently obtained and were seized.
Many of the other major players, including the banks and the law offices, claimed they didn’t know anything. But the Organised Crime and Corruption Reporting Project still accused the Luxembourg bank BIL of playing a central role, and other companies, such as Trident Trust, saw reputational damage. In a separate, later investigation, top Trident directors were issued significant fines and bans from holding supervised roles for failings such as the failure to ensure compliance with regulatory requirements.
It’s an issue that highlights how, when it comes to corruption in a company, ignorance can’t be used as a defense. As a company, it’s your responsibility to know who you’re doing business with. If you’re unsure, or you spot any red flags, hiring an investigator will help you get to the bottom of any issues quickly and keep your business safe.
So, how do you spot embezzlement?
Imagine you’re the director at the bank Hajiyeva worked at. Or any company where an employee could be tempted to embezzle. How do you know what to look for and how to stay protected from the devastating effects of corruption in business?
Recognizing the red flags of embezzlement is the first step to an effective prevention strategy. Here are a few of the warning signs to keep an eye out for.
- Missing documents, such as invoices, receipts, payroll documents, or other financial records. There’s a possibility that a bad actor is destroying documents to get rid of evidence of an embezzlement crime.
- Unusual spending. If you notice duplicate payments, delayed deposits, large or unexpected checks from unknown sources, it could be an indication that embezzlement has taken place.
- Accounting inconsistencies, such as an imbalance of accounts from month to month or a sharp drop in company funds. If you notice a sudden change that cannot be explained, it’s time to call in a private investigator.
- Suspicious employee behavior, such as unwillingness to take time off, working unusual hours, or sudden lavish purchases beyond their means. Of course, these aren’t guaranteed indicators that an employee is committing a crime, but they should not be ignored, especially if noticed in combination with some of the previous points.
What if you suspect corruption?
If you suspect embezzlement or corrupt activities have taken place, it’s important to take action. But proceed with caution. Bold accusations are to be avoided and might cause more harm than good –– employees are innocent until proven guilty and, if they do turn about to be guilty, a premature accusation could cause evidence to be destroyed, jeopardizing the investigation.
Your first step should be to contact a good lawyer. They can advise you on the best course of action to take, whether it’s launching your own investigation or hiring the services of a private investigator. If they advise on the latter, you’ll be sure to receive an exhaustive investigation.
If the case takes you across borders, you’ll need financial experts, multilingual investigators who understand the nuances of other cultures. International investigators put boots on the ground, tasking their expert team to conduct in-depth interviews, following up leads in person and digging deep to uncover every detail for a comprehensive investigation.
The Owl does all this and more, offering boutique corporate investigation services that are fully personalized, tailoring our services to your precise requirements. We work quickly, discreetly and with agility, able to adapt to every situation to get to the bottom of suspected malpractice.
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