Ex-Employee Embezzlement: How Should We Handle This Fraud Case?

One of our ex-employees has cheated our company. Previously, he was working in our accounting department and issued several large cheques in his name, obtaining the authorized signatory's signature on the cheques. He has now withdrawn all the funds, totaling more than 18 lakhs. We do not have photocopies or receipts of the cheques. Our bank provided us with copies of the cheques, and there are no alterations on them.

Actions to Consider

Please suggest what actions we should take. Should we file a First Information Report (FIR) against him? All the cheques are marked "account payee," and he has also changed his address from the one registered in his bank account.

Please advise.

Certainly, you must take action against him. Also, you need to contact your legal department or company lawyer to handle this case.

Steps to Address Employee Fraud

First of all, you need to go for a manhunt. If I'm not wrong, he would leave the county shortly or stay in some remote areas. For this, a legal case has to be filed, and you need to track him down. You should have substantive evidence for the same, and I'm sure he is not alone; there would be someone else or more to help him. Try tracking them. It's not easy, but I'm sure it would yield results.

Dear Pankaj,

The incident you have quoted raises certain questions. These are as follows:

a) When were the cheques issued? After how many days/weeks/months did you discover this fraud?

b) Why did the "Authorized signatory" sign the cheques in an individual's name?

c) Don't you have a procedure to include Purchase Order + Invoice + cheque when signing the cheques?

d) If there was such a high amount shortfall, why was it not detected during account reconciliation? What were your internal auditors doing?

Yes, that accounts clerk is a fraudster and should be brought to book, but the "Authorized Signatory" and your Accounts Manager have also participated in this fraud. Their complicity or negligence cannot be condoned.

I recommend conducting a proper domestic inquiry and then, with the evidence, approaching the police. If your HR department has the account clerk's photo and fingerprints, provide these to the police.

Ok...

Dinesh V Divekar

This seems to be a case of a criminal offense. I agree with Mr. Dinesh. Detect how this happened, as you need to understand that a person can't entrust such things without help. To commend this act, one definitely needs partnership. Evidence against these fraudulent methods practiced determines the crime that has to be taken for appeal.

This is a clear case of misappropriation. You may go ahead and lodge a complaint with the police after verifying all the facts thoroughly and obtaining consent from the top management. It is advisable to seek legal advice before filing a complaint so that you have all the necessary evidence to strengthen the case.

Cheers!
Pradeep