Manager defrauds business to tune of $1 million: How your business can prevent fraud

Manager defrauds business to tune of $1 million: How your business can prevent fraud

The former manager of a street furniture manufacturer has been ordered to repay more than $1 million after fraud of “a most egregious kind”. 

Benjamin Dickson was the production and manufacturing manager of the Adelaide branch of Artcraft.

Over a four-year period he allegedly took large quantities of Artcraft’s metal and had it delivered to a scrap metal recycler pocketing $500,000 in cash in the process.

Dickson delivered ute loads of metal himself and also co-opted other workers to unwittingly assist him by cutting and delivering the metal to the scrap metal recycler.

He spent the money on a lavish lifestyle including holidays to Sydney, Melbourne, New Zealand and Bali which were all paid for in cash. 

Eventually Dickson’s manager, Donald Wild, cottoned on to the fraud after noticing the amount of aluminium purchases was much higher than at other branches.

Wild told the court he had failed to notice the fraud as Dickson was a trusted senior manager.

“I guess some failings on my behalf for not being on the factory floor enough to see that sort of thing happening, but also it seems that my employees didn’t feel empowered enough to put their hand up and say “hey something strange is going on here”,” Wild said. 

The South Australian Supreme Court found as Dickson was in a senior position he was familiar with the strengths and weaknesses of Artcraft’s inventory system.

Justice Kelly found Dickson had perpetrated fraud on Artcraft over a four-year period. 

Justice Kelly awarded an award of exemplary damages of $50,000 and also ordered Dickson’s wife to pay Artcraft $59,800, as the court found she was aware her husband was bringing unexplained cash into the household.

Artcraft also settled its case against a receiver of the misappropriated materials for a payment of $253,000.

SmartCompany contacted Artcraft for comment but did not receive a response prior to publication.

Gary Gill, KPMG’s national head of forensic, told SmartCompany the more senior the person, the bigger the fraud typically is and the longer it takes to uncover.

Gill says particularly where coworkers or direct reports have got involved, albeit unwittingly, that’s quite a common scenario.

“Awareness amongst staff is usually your best defence against fraud,” he says.

“People know when something doesn’t look right, the trick is getting them to speak up.”

Gill says the problem for many small businesses is that there is no mechanism for getting whistleblowers to speak up.

“In situations like that when a person is asked to do something by their boss, who do they speak to?” Gill says.

“Is there a clearly articulated procedure for people to whistleblow?”

Gill says it is increasingly common for businesses to have an external whistleblowing facility and analytics is also useful as a means of fraud detection.

“If there is a large fraud I have no doubt if you looked through the underlying information you probably would have noticed,” Gill says.

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