A former Leighton Contractors employee is set to be sentenced tomorrow over allegedly stealing more than $20 million from the company and spending it on motorcycles, racehorses and women he met while browsing “sugar daddy” websites.
While the incident is unusual, experts say small businesses need to continually double-down on their anti-fraud efforts or risk being made insolvent with just one attack.
Damian O’Carrigan pleaded guilty to the alleged fraud last year after being arrested in November, but new reports detail the extent of his spending.
The extent of O’Carrigan’s alleged fraud is not unprecedented. In 2010, a bookkeeper from Clive Peeters was found to have spent millions on properties.
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According to the Courier-Mail, O’Carrigan said in an affidavit he spent $4 million as gifts to “various women over a period of approximately 10 years”.
“These relationships were instituted through the websites ‘Seeking Arrangement’ or ‘Sugar Daddy’,” he said.
“Transfers of these monies occurred over this 10-year period to numerous women and ranged in value from a few hundred dollars to many thousands of dollars.”
O’Carrigan went on to explain up to $7 million was used over 10 years for racehorses, while he bought several motorcycles for $500,000. Other funds were spent on dogs, fish breeding and boats.
SmartCompany contacted Leighton Contractors but did not receive a response before publication.
The revelation is only the latest incident of corporate fraud in Australia. There have been several instances of fraud affecting companies both large and small. In May 2012, Hastie Group revealed the company collapsed due in part to a $20 million fraud.
Around the same time, a woman was charged with an $86 million fraud after an investigation into the collapse of transport company Viking Group.
KPMG forensic partner David Luijerink told SmartCompany this morning small businesses are especially vulnerable to fraud, and need to constantly make sure they are strengthening their business.
“A small business only needs to have one of these events, and it could possibly take the business down,” he says.
“Large companies like BHP or NAB can take a hit of half a million dollars. But for an SME, that money is coming directly from the bottom line.”
Luijerink points to the occurrence of the fraud at Leighton over a number of years. This is typical, as shown in the regular KPMG fraud reports. Perpetrators are usually male, in their 30s, in a management role, and have been with the affected company for at least a year.
This means businesses know who to look for, he says.
“Businesses need to assess that risk properly, and look for practical steps to try and mitigate it.”
Examples can include making sure financial systems are locked down tight, and also establishing an anonymous phone line, he says.
“Starting an anonymous report line is important,” he says. “Employees are probably one of your best detective mechanisms for fraud.”