Corporate fraud comes in many colors. For many businesses the most unexpected threat is the one that emerges from within company walls. No employer ever expects that treatment from their own team, but yet it happens, and it is important to prevent these incidents and to learn how to recognize the red flags before a great damage is done.

The Philippines is the home to many global and multinational companies nowadays. Some of the country’s greatest attractions -in terms of employment- is the English proficiency of the population as well as the technical skills and education. But the Philippines has a problem that cannot be overseen it is also a country where fraud and corruption have thrived for years, which imposes an important risk to consider when developing business and hiring talent.

Employers should keep their eyes open

Among the most common types of internal employee fraud is expense fraud, in which workers deliberately inflate figures on an expense report to be reimbursed for more than they should receive from their employer. This type of fraud might not have a great financial impact, as figures cannot be inflated a lot without someone noticing, but it is still a problem that may affect the company when the behavior is being repeated by several individuals. It is also one of the entry ports for fraud.

But the greatest fear from employers when it comes to employee fraud are the risks associated to money laundering, embezzlement, and bribery, especially within multinationals with multi-account corporate banking. Investigations in international cases have uncovered how complex crime rings installed within legitimate and renown organizations have conducted tax scams, have laundered money through corporate bank accounts, and transferred dirty funds across borders.  Even without a direct financial impact, the legal and reputation damage that may follow any of the above mentioned crimes can be devastating for a company.

How to prevent employee fraud in the Philippines?

Key tactics to address this risk include employee background checks in the Philippines (not only before hiring but periodically post-hiring), a stronger oversight of employee activity and strict protocols  and procedures regarding expenses, payroll and provider payments.

Investigators in Manila say that a great part of the risk is minimized when proper background check investigations are conducted on ne hires and at least annually on employees. Making sure that the people who work for the company are trustworthy is a big step into avoiding corporate fraud committed from the inside of the organization, so it not really an option.

Sometimes, suspicious behaviors might require of surveillance. If someone is acting in an unusual way and other employees have noticed changes in character, sudden lifestyle “upgrades”, missing assets or information, surveillance might be the best option. It is not uncommon to find employers conducting surveillance in the Philippines to see who their employees meet and what they do, given that it is know that people can easily make money in this country for selling information or bribing authorities.

Another line of defense is to have clear protocols, guidelines and procedures for every transaction the company does. This is particularly important to be able to spot red flags easily, to understand when something is out of the normal, and to stop anything suspicious in a timely manner.

Contact us if you are hiring in the Philippines, or if you feel like you need to keep a closer look on your workforce.  Don’t be a victim of a bad hire or fake resume.  Be safe, and hire the best!

C. Wright
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