Employee fraud in Australia: Meet the bank employees who stole $217 million over 13 years

They’ve worked in their jobs for more than 10 years, they’ve got a taste for luxury and more often than not they have a gambling addiction. Employers watch out – they could be stealing millions of dollars from your company (or clients).

New research from Warfield and Associates published today reveals since January 1, 2000, employee fraud in Australian financial institutions has cost businesses and clients $217,266,481. 

However, Warfield and Associates chief executive Brett Warfield told SmartCompany the amount could be much greater.

“This is a snapshot of what we know from all the court documents and news reports, but the smaller the fraud, the more likely it is to go unreported because of the cost and time of bringing about a successful prosecution. Often businesses will dismiss the employee, tighten their controls and move on,” he says.

The research focused specifically on employees at financial institutions, following previous research by the firm which revealed one in three cases of all employee frauds occurred in a financial institution.

“Financial institutions, unlike many others, are generally quite large and have lots of money which can be leant out and borrowed, which involves lots of trust with external parties,” Warfield says.

“The second thing is these businesses have people with a lot of autonomy in their roles, like tellers and loan managers, they have a lot of ability to bypass processes and authorisation systems.”

Out of the 120 cases identified, 69 of them occurred at the big four.

The largest amount stolen by an individual in the past 13 years was $45 million from a woman who had worked for ING. The fraud occurred over five years where she stole goods to fund her love of expensive pearls, houses and Michael Jackson paraphernalia.

The study also revealed the majority of employees had been working for their companies for more than 10 years.

“When it came to how long they were an employee, we found details for 46 out of the 123 employees involved in the frauds.  Interestingly it was more likely to be a long-term employee,” Warfield says.

“In 15 out of the 46 people they’d worked for their employer for over 20 years when they stole the money and another third had worked there for between 10 and 20 years. These people were long-term, trusted employees.”

There was an almost even split between males and female fraudsters, with 55% of the offenders being male.

The age of the perpetrators at conviction ranged between 20 and 60 years, with the largest number of frauds (51 of 123) carried out by those aged between 30 and 39.

The people involved also came from various roles and levels of responsibility within their organisations, ranging from accountants to cash settlement officers and even a senior fraud investigator.

Of the 123 people, only five had prior criminal histories for deception related offences. One of the perpetrators had three prior convictions for gambling related frauds, but no background check had been run on the employee when he was hired.

Warfield says a gambling addiction is one of the warning signs employers should look out for.

“Looking at just the 10 longest serving employees, two of them stole the money to prop up a failing business, four were motivated by gambling addiction, two for lifestyle choices and then another two were related to financial problems,” he says.

Out of the 120 cases, 62 were motivated by gambling, amounting to a total theft of $90,860,355, while 35 were driven to improve their lifestyle.

The most common way the frauds occurred was where the perpetrator stole money from customer’s bank accounts and term deposits, accounting for 41 of the 120 cases.

In a sign of the poor fraud detection procedures in existence within some businesses, one fraud went undetected for 16 years and another went for over 10 years.

Warfield says businesses need to focus more on educating their staff to spot the warning signs.

“My main advice based on the research is to educate their staff about fraud and how it occurs,” he says.

“It took some businesses so long to discover them, as people weren’t able to pick up on the warning signs. Train and educate your staff in fraud and this can benefit you by bringing these things to light quicker.”

Warning signs identified in the report included: gambling addictions, ignoring company policies, lack of supervision in their role, reactivating the accounts of former employees and logging into the system under another employees name.

Warfield’s other advice is to learn from the mistakes of others.

“Understand what risks exist within your business and what the previous frauds were which have occurred in your industry.”