Diary of an investigation

Last month, Enron boss Jeffrey Skilling was sentenced to 24 years for his role in the giant fraud that led to the energy firm’s collapse in 2001.

This is an extreme example, but workplace malpractice and other more overt crimes, including theft and fraud, put employers in a very awkward and difficult position.

Employers can be reluctant to pursue criminal or civil proceedings against their employees for fear of the commercial repercussions. The negative publicity generated by a court case can harm a company’s reputation and in turn affect profitability. What’s more, if there are problems in establishing proof, the employer could face a costly settlement and massive legal fees.

Doing nothing is really not an option. An employer should be seen, both internally and externally, to be acting fairly, appropriately and within the law.

The problem is that employers are rarely equipped in time, effort and skill to be able to conduct a successful malpractice investigation, so frequently outsource this to a third party that can be seen as independent to the company.

But what’s involved in a corporate investigation? The following are real-life examples of how two companies got to the bottom of work malpractice.

Case one: Beating theft and drugs

A construction company working on a multimillion-pound project had been suffering from substantial thefts of steel and other materials. The company undertook a six-week surveillance operation using its own staff, but failed to establish anything, and the thefts continued.

The company suspected a third-party skip truck business and, despite having no hard evidence, the senior manageres of the skip truck company were ‘summoned’ to HQ and told to sort out the problem or have the contract terminated.

The truck company approached a private security firm to investigate the case. The firm installed night vision equipment, and within 48 hours the thieves were identified.

To the astonishment and embarrassment of the construction company, the main instigator and beneficiary was actually one of its own long-service senior foremen – not the skip company.

In partnership with HR, the security company undertook a formal investigative interview which identified all those involved and recovered about half of the stolen materials.

But that wasn’t the end of the matter. The investigation also revealed a number of high risk areas in terms of criminality and potential workplace malpractice, so the construction company ordered a further security and risk review.

Undercover operatives worked as construction workers and discovered a scam involving the purchase of Construction Industry Training Board (CITB) permits, a legal requirement for operators of plant machines. Not only were the penalties for violation severe, but this also had massive health and safety implications.

The private security firm set up a sting operation where it covertly filmed the parties selling CITB licences. It passed this evidence to the CITB and the Health & Safety Executive (HSE), offices were raided and action taken against those responsible.

In this instance the HSE accepted that while there had been safety breaches due to the illegal use of CITB permits, the construction company was responding to the issues responsibly and was not prosecuted.

The investigation also uncovered a bigger problem – the widespread use of controlled drugs and the ignorance of company’s management towards the issue of drugs. The investigators identified several dealers who had taken jobs on site as unskilled operators, simply to have access to a ready-made market. More than 30 people were removed from the site and the company subsequently invested in drug awareness training.

Case two: Bullying at work

An Asian woman was appointed manager of a small team of male staff. Shortly after her appointment, she formed a strong platonic relationship with another manager from a different business unit, but this attracted unwelcome gossip.

Then her own line manager went on long-term sick leave and she was left to manage the team alone. At least three of her staff made it known that they “did not appreciate being managed by an Asian woman”, and resented her.

Soon after, Page 3-style pictures began to appear pinned outside her office. She raised her concerns, but HR and line managers failed to respond appropriately. She was despondent and didn’t know where to turn.

She later reported receiving threatening e-mails and ‘silent calls’ on her mobile phone. Her immediate line manager had by then returned to work, but he regarded the threats as a “silly joke”. Although her manager and his team regularly socialised as a group, she was excluded.

The tone of the anonymous e-mails became more threatening and the regional manager also began to receive copies. Her employer then reported the threats to the police. The regional manager instructed her line manager to conduct a formal investigation and inform HR. The police questioned various male employees, but all denied any knowledge of the allegations. The firm had to suspend an entire team of shiftworkers until the investigation had been completed.

The impact on the business was damaging. Clients became aware of the issues, and staff at other company sites consequently became increasingly hostile towards management – so productivity was affected.

The company approached a private investigation specialist, which undertook a preliminary risk assessment. The company ensured the female manager was never left alone and that she was accompanied to and from work.

Following interviews with employees, analysis of duty records, computers and much more, it became evident that she had endured weeks of harassment, mental bullying and discrimination.

It was also clear that senior managers had demonstrated a complete ignorance of cultural differences and ethnic diversity and failed to recognise the potential risks to the individual and the business.

But the case was not so clear cut. During the investigation, the female manager subsequently confessed that she had written the threatening e-mails herself to draw attention to the other bullying incidents, and she resigned. Her line manager was advised and the suspended staff reinstated.

A few days later she was arrested by the police, who agreed not to charge her. She received a formal police caution for wasting police time.

The financial implications of the whole affair were substantial. Had management and HR been more responsive in the first instance and shown some empathy to a new manager, she may not have been compelled to fabricate these e-mails. This was a classic case of how not to deal with a grievance.

How to deal with an investigation

1 Act promptly. Don’t delay seeking support from professional advisers.

2 Preserve evidence. Leave it any later, and key evidence can been lost or tainted in some way.

3 Maintain a written record of action taken throughout.

4 Avoid committee-type decision making. Ideally, there should be one senior manager appointed to oversee the investigation.

5 Establish and agree the aims and objectives of the investigation from the outset.

6 Consider from the outset potential consequences and consider shareholders, publicity, reputations and whether to prosecute and or litigate.

7 Comply with company disciplinary process. Most cases that fail at employment tribunal do so because employers have failed to follow the correct process.

8 Remember the burden of proof is significantly less in employment and civil matters than that of criminal cases. It is essential the organisation must be able to demonstrate it has acted with reasonable cause.

By David Gill

  • David Gill is managing director of corporate security firm Linx International. The company provides security and risk management consultancy, investigation and training services for a wide group of businesses.

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