1. keep calm
The idea of being betrayed by an employee is an emotional rollercoaster ride, especially for owner-managed companies. It is therefore essential to remain calm. Especially if there is only an initial suspicion. This applies in particular to the entire range of fraudulent acts of white-collar crime such as theft, embezzlement, corruption and other offenses.
2. Verify your information.
Before you can take any action, you must first clarify how reliable the information that has aroused your suspicions is. Ask yourself the following questions: What kind of information is it actually about? Are they just vague rumors? Or are the tips concrete and comprehensible?
Also check where the information on which the suspicion is based comes from: Did a whistleblower point it out to you? Did you discover the fraud yourself during initial investigations? Or did you perhaps even catch the employee in the act?
Only after you have checked and verified your information can you decide on the next steps: Should further investigations be carried out first? Or has the suspicion been confirmed and you now have clear evidence of fraud?
3. Don't go it alone.
Don't go it alone if you don't have experts and processes for fraud management in your company, such as an internal audit department or perhaps even a company-wide anti-fraud management system and appropriately trained staff.
If you approach the employee directly about your suspicions, they have the opportunity to deny the crime. And the person is forewarned. If you have no other evidence, it would be a case of testimony against testimony. The opportunity to clear up the fraud would be lost and you would find yourself in a difficult situation under employment law: as an employer, you have accused your employee of a criminal offense without being able to prove it.
4. Assess the potential risks for your company.
To better assess the measures available to you, you should try to quantify the risks your company faces and the amount of potential damage as accurately as possible. What is the scale of the fraud? Does the fraud or the alleged crime relate to one or more companies, divisions or even to your subsidiaries abroad? Try to assess the risks for your entire company based on the information available.
5. Consult an expert as early as possible.
As early as possible, consult experts who have experience in the internal investigation and detection of fraudulent acts and know how to deal with white-collar crime. If you initiate countermeasures whose consequences you do not fully understand, you run the risk of damaging your reputation and unsettling the rest of the workforce.
An experienced fraud manager will also ensure that the evidence is actually admissible in court and, if necessary, ensure smooth cooperation with law enforcement authorities and the public prosecutor's office.
6. Weigh up the legal steps carefully.
Depending on the circumstances, you will want to dismiss the employee without notice. In clear-cut cases, this can be a good measure, but remember that an employee must answer to you about their work under employment law. This does not apply to ex-employees, so the only option here is to file a criminal complaint.
Once you have filed a complaint, you can no longer stop the investigation, which can result in various other risks for your company. You should therefore carefully consider the steps you can take under employment law.
7. Finally, thoroughly investigate the fraud case.
Finally, thoroughly investigate the fraud case: Identify the vulnerabilities in your company's operational processes that enabled or facilitated the fraud and derive measures for better control of the processes as well as for the prevention, detection and processing of fraudulent acts.
Depending on the company, this can be, for example
- compliance guidelines such as the consistent application of the dual control principle,
- the establishment of whistleblower systems for whistleblowers and
- the establishment of a crisis management for the fraud case.
In any case, you should work with an expert whose daily business is fraud investigations at this point at the latest, so that you can devote yourself to your actual obligations again.
