Firm lost £3 million to ‘enemy within’

Posted: 3rd March 2015

CashBusinesses tend to focus on the competition – but a case in which two employees of a leading recruitment firm succeeded in defrauding their employers of almost £3 million revealed that the enemy can often be found closer to home.

The scam involved the diversion of money from the firm over a prolonged period by a junior employee who used false documents to give the impression that the cash was being paid to fictitious staff members. The fraud was uncovered by the firm’s payroll supervisor – however, instead of reporting the matter to his bosses, he persuaded the employee to cut him in.

The two men each pocketed well over £1 million. The employee spent the money on servicing his expensive gambling habit but his supervisor invested in property, a valuable car and jewellery. £120,000 in cash was found when his home was searched by police.

The employee subsequently admitted fraud by false representation and was jailed for four years. The supervisor pleaded guilty to possession of criminal property and was given the same sentence. The judge who jailed them described their offences as ‘appalling breaches of trust’.

The facts of the case emerged as the supervisor challenged his sentence at the Court of Appeal. In reducing his jail term by six months, the Court noted that, at an early stage of the proceedings, he had entered into a formal agreement to repay to the firm every penny he had taken.