Commercial Fraud

It is surprising how rarely people look behind the

obvious and ask the awkward questions.

I dealt with a case of fraud where the accounts clerk managed all the finances for a business which operated from four sites. She was such a nice person, visiting every branch daily to collect the cash and bank it. She was so kind and even allowed the staff and the partners to stay for free at her villa in Puerto Banus in Marbella. Everyone, including the partners (and possibly the auditors), were fooled by her apparent willingness to assist and ‘put herself out’. No alarm bells rang over the daily visits to the branches and visits to the bank. No one checked to see if any accounting procedures or controls were missing.

Not surprisingly she defrauded the business of some £2 Million over 10 years. She was found guilty, but unfortunately it did not stop there. HM Revenue & Customs sued for under declarations of VAT on these scams and the senior partner stuffed a fatal heart attack.

In another case, the accounts clerk for a travel agency was accused of fraud and I was asked to defend her. On checking the allegations, I found that the controls over cash had been non-existent. When I asked to visit the travel agency, the finance director fiercely opposed my visit, alleging that the procedures manual that he had supplied was adequate. The judge agreed with me and insisted that I be allowed to visit the firm and carry out tests on the old and new procedures.

When carrying out my tests, I found that not only did the revised procedures still allow for fraud, but more importantly, that fraud was still continuing despite the sacking and prosecution of the accounts clerk. The finance director disappeared on a one way ticket to Rio and the case against the accounts clerk collapsed.

Another case involved a large timber importer whose accounts clerk was allegedly raising false suppliers invoices. The prosecution was being assisted by a major accounting firm who put a couple of university graduates onto the case. They had gone for the obvious apparent frauds, without checking the movement of the timbers from import off ship through the delivery to customers. Unfortunately for them, these were smoke screens and I was able to show the jury that the goods were genuine, had been received and sold to customers who had paid for the goods.

As a result my client was clearly not guilty of the charges laid against him. Had the university graduates delved deeper thy would have found that behind the smoke screen the clerk had ‘robbed’ Peter to paid ‘Paul’ and so was guilty of fraud, but had not been charged with the correct offences.