Corporate investigations: Everything you need to know

Uncover areas of risk in a business, to prevent losses

In every business, there are gaps in processes. These areas of risk are where dishonest employees could take advantage for personal gain. In fact, employee theft costs Australian businesses $750 million each year.
So how do you stop it from happening? Launch an undercover risk assessment and corporate investigation.
Engage a licenced private investigator to go undercover within the company. You may think of private investigators as the secret detectives who catch cheating spouses or investigate cold cases. But there’s a subset of PIs who specialise in the niche of corporate risk assessment and corporate investigations.
The combine their skills in collecting evidence and taking covert surveillance footage with their knowledge of business practices to expose areas of risk and discover wrongdoing by employees.

How can a private investigator help in corporate risk assessment?

Private investigators can help in cases where there is question over the handling of physical goods or cash. They’re experts at collecting evidence and providing photographic proof. Specialist corporate investigators are experienced in business cases; they get deep inside a company and plug the leaks from which the business is losing money.
The main areas of investigation include:

• Risk assessment of the company’s chain of custody
• Undercover surveillance activities to collect evidence of cash or goods going missing
• Factual investigation of a theft or incident that has already happened. Interview employees and witnesses out in the open

The areas where a private investigator can help are quite different from financial risk assessments. Cases like financial fraud and embezzlement are best left to financial auditors, because they’re best at tracking money movements through different bank accounts and checking that the books balance.

Handling an investigation internally can lead to blind spots

In general, people who know they are being investigated will do everything possible to avoid being caught in the act. If a senior manager is asking unusually detailed questions, employees are more likely to get the idea that they’re being investigated.
This is why an external and independent investigator is the best person to investigate corporate risk management cases. The investigator is unknown to the employees and can create a believable backstory about why they’re on site, to avoid arousing suspicion. And because employees don’t realise they’re under scrutiny, they behave as they always do, which helps to expose the fraud.
Let’s take a look at some examples of the corporate investigation process in action.

Corporate risk assessment case: mining

Here are the basic steps for a corporate investigation into the suspected loss of goods from a business. A similar process could apply to products obtained through mining, farming, manufacture, or distribution of wholesale or retail goods:

• Take a full brief of business practices and suspected activity
• Define the scope of the investigation
• Go undercover as an external auditor or new worker
• Gain trust and be credible and believable in the undercover role
• Follow the chain of custody of goods
• Meticulous note taking about every micro-step in the process
• Identify areas of risk of loss or fraud
• Surveillance video or photography
• Produce a detailed report and recommendations for the company

A precious metal mine asked a private investigator to identify areas of loss and risk in their operations. The investigator took on the undercover role of an auditor to go inside the mining operations. Based on their production history, the mine owners expected to produce a certain weight of metals per metric tonne of earth mined, but they were finding their production amounts had dropped significantly.
The investigator followed the chain of goods from the moment the materials (rocks containing the ore) were dug out of the ground, through the transport process to the surface, through the processing phase to being measured as net output. The investigator interviewed management about the company procedures and observed employees during the process.
The investigator identified several areas in the process where certain practices were highly vulnerable, so where a potential perpetrator could take advantage and pocket small lumps of raw metals to sell on the side for their own personal gain. This constituted stealing of company property.
In a 25-page detailed report, the corporate investigator made recommendations to the company to change their handling process and plug the gaps. The report was so detailed that they were able to implement the same loss prevention recommendations across all their mine sites.
Approximate cost of this type of corporate investigation: $18,000
Investigation time: ½ day briefing, 2 days research, 3 days on site, 4 days compiling vulnerability assessment. Completed within 3 weeks.
Estimated amount of money the company saved in preventing theft of goods over the next year: $1,000,000.00 In the first year alone, the investigation’s results decreased their losses and increased their revenue by $1,000,000 which is an excellent return on their investment of $18,000

Surveillance investigation case: vending machines

Here are the basic steps for an investigation into the suspected loss of cash from a business:

• Take a full brief of business practices and suspected activity
• Define the scope of the investigation
• Perform a surveillance investigation by following the subject and observing their actions, without being noticed
• If a crime is being committed, obtain photographic or video evidence using covert cameras
• Provide a report and copies of the photographic evidence
• Ensure correct handling of evidence (a disgruntled employee may file a wrongful dismissal case, so correct handling of evidence ensures the evidence is admissible in court)

In this case a snacks and drinks company hired a corporate investigator to find out if one of their vending machine refill operators was stealing cash from the vending machines. The employee’s job was to refill stock in snack and drink vending machines, collect cash and return the cash to the company for reporting and banking.
The company knew that the amount of cash collected didn’t match the units of stock being refilled, so they suspected the employee was pocketing some cash each day.
The corporate investigator followed the employee on their usual route for one day. The surveillance exercise involved:

• following the employee while making deliveries
• gathering evidence while at vending machine at different locations
• taking covert video and photographs of the employee handling goods and cash
• all without the employee noticing that they were being followed and recorded

The investigator created a detailed report and photos for the company, which gave the company enough evidence to confront the employee about the suspected theft. The employee admitted to the theft. It turned out that the employee had stolen over $450,000 in cash in preceding 12 months.
Approximate cost of this type of corporate investigation: $13,000
Time taken: 3 hours’ briefing, 5 day surveillance operation, 1-day report writing. Completed in 1 week.
Approximate amount of money the company saved in preventing the continuation of lost goods and cash over the next 12 months: at least $500,000.
By proving that the employee was stealing cash, the corporate investigator helped the company save over $500,000. in lost revenue. The best part is that the company was able to tighten their cash handling processes to prevent losses like this in the future.

Invest in risk assessment and corporate investigation

If you suspect there’s fraud or theft happening in your company, you need to plug the holes in your processes where dishonest people can take advantage. Your investment in either a corporate investigator or a financial investigator will be worth it, because you’ll prevent losing more money to theft.

Want to know more about hiring a Private Investigator?

Contact us today and we’ll be happy to answer any questions you have about how a we can help you. Feel free to get in touch.