In tough times fraud committed by employees against their companies booms.

While a basic fidelity guarantee is a good idea and a commercial crime policy an even better idea, "the best defence against being ripped off by your employees is to remain alert to patterns of behaviour which may point to fraud," advises Brian Gillespie of Alexander Forbes Risk Services.

And employers shouldn’t kid themselves that employees only steal small amounts. Even large-scale theft starts in a small way with lower to medium white collar employees usually causing the most damage.

"The employee sees an opportunity and, knowing there’s little chance of being found out, steals once and gets away with it. After ensuring there are no repercussions the process is repeated. This can continue for years if the level of theft remains the same," explains Gillespie.

For example, 25 years ago a personal assistant at the branch of a financial institution in downtown Johannesburg stole R2-million over a period of ten years. It was only when she went on leave and someone else had to do her job that the theft was discovered.

"Typically most thefts or fraud are only discovered when the perpetrator is not there," says Gillespie.

Often though the dishonest employee finds that as their ill-gotten gains improve their lifestyles they need more money to finance their taste for luxury goods, gambling or drug-addiction — exposing themselves to detection through greed.

Basic precautions that businesses can take to prevent their employees stealing from or defrauding them include:

1. Ensuring that all cheques or electronic payments require counter signatures or authorisation

2. Conducting internal audits monthly

3. Shredding old cheques

4. Making sure cash is locked away or properly controlled

5. Compelling employees to take at least two consecutive weeks’ paid leave each year

6. Monitoring the lifestyles and spending patterns of your staff

Historically businesses have taken out the minimum fidelity guarantee, some as low as R100 000, because they simply don’t believe that their employees will rip them off — or could actually steal significant amounts of money.

"But R100 000 is very little when one sees the amounts that are actually taken," cautions Gillespie.

The invoicing and billing system for example is particularly vulnerable to theft and fraud committed by white collar employees.

"This is why details of the insured’s systems of checks and control are disclosed on any fidelity insurance proposal and insurers check these carefully before agreeing policy terms and conditions," concludes Gillespie.

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