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White-collar crime gives sleepless nights to employers


Internal surveillance system can help curb possible sabotage by the ‘insiders’, says Marri Ramu


White-collar offences are of two types. Duping of depositors, who invest money in schemes of a financial firm or chit fund lured by high interest rates, by the management comes under the first category. Embezzlement of funds by employees of an organisation using their familiarity with the nature of transactions is of second type.

Law-enforcing agencies can do little to prevent the first type of frauds since they don’t have any control over depositors or investors. They have limited role in checking frauds involving ‘sabotage by insiders’ also.

But, of late, such scams registered a spurt calling for special measures by the heads of the organisations. The cheating cases with the element of insiders’ involvement’ are crucial because the monetary loss and the number of victims are too high.

Colossal damage

For example, the total value of the cash, jewellery and other goods stolen in 6,487 property crimes like burglaries and robbers in 2008 was Rs.25.82 crore. In a single fraud case reported the same year, directors of a society embezzled Rs.54 crore!

The huge amount lost by hundreds of depositors in this case pertaining to Telegraphic Employees Credit Co-operative Society shows how a single white-collar offence can cause colossal damage. Similarly, tricksters defrauded a bank of Rs.5.1 crore by presenting a fake cheque three months ago. In a separate case, three employees of a private telephone company caused over Rs.2 crore losses to their employers by misusing its network.

Investigators feel the three frauds by insiders were committed due to lack of an internal surveillance system. A scheme to check possible sabotage by insiders is a must for both public and private firms as the graph of white-collar and cyber crimes is shooting up day by day, they argue. In the Telegraphic Society case, the fraud could have been contained if a proper audit of the diversion and investment of funds was put in place.

In the fake cheque encashment case, it is noticed that there was no method to cross-check the operations of the person in-charge of cheque clearing centre. The three accused employees of the telephone company had been diverting the calls for weeks together. Video footage recorded by secret cameras of the company, when examined by police, showed the three employees moving suspiciously at the restricted place several times.

Inquiry into their presence at restricted place could have helped detect the fraud much earlier. Theft of source code data by employees in software companies is a similar offence though they are being dealt separately as cyber crimes. On the whole, police suggest, it is time to take a fresh look on the internal surveillance systems to check sabotage by insiders.

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