Theme Fraud Van Benthem & Keulen

Internal fraud and unethical conduct

Adherence to ethical principles is an important matter and media reports on it appear every day. We regularly receive queries about unethical conduct by directors and/or employees of companies. Examples include executives who abuse their position, or employees who commit fraud by abusing the access they have to the employer's systems or bank accounts. We also regularly receive questions about possible conflicts of interest.

What impact does internal fraud and unethical conduct have on your company?

It can be considerable. The fact is that it can seriously damage your company's reputation, given that the consequences can be social as well as s legal and financial. Many companies therefore actively prevent unethical conduct and draft policy rules to deal with any report of fraud or unethical conduct that they might receive.

Tips on how to limit fraud / unethical conduct

There are several things your company can do in this regard. For example, establish clear rules of conduct for your employees, making clear what is and what is not allowed. For example, you could include a rule making it compulsory for employees to report any ancillary activities in advance. Also advisable is to have a whistleblower arrangement in the event of any wrongdoing. Such rules are actually mandatory if you have 50 or more employees.

Prevention is obviously better than cure. We therefore recommend that you put safeguards in place to prevent employees from being able to unlawfully transfer funds to third parties or to commit any other type of fraud. Finally, if you suspect unethical conduct by an employee, it is vital that you take immediate action, such as suspending him/her if warranted. If you do not take appropriate action in this regard, any summary dismissal or other action you take against that employee could later be challenged.

Practical tips to prevent fraud or scams

  • Ascertain whether your company is at any particular risk of unethical conduct and whether you can put in place any safeguards to prevent it.
  • Provide information about ethics and what you expect of your employees in that regard. Put all this in writing.
  • Evaluate your internal arrangements regarding the appointment of confidential advisers in your company and the avenues available for whistleblowers to report any wrongdoing. 
  • Assess which individuals should be called in when there has been an instance of unethical conduct. Involve HR in this, also determining who should be in charge of conducting investigations and limiting and/or recovering damage.
  • If you suspect unethical conduct, it is important that you take immediate action, for example by suspending the employee(s) involved.

What Van Benthem & Keulen can do for you in the event of internal fraud or unethical conduct

Our specialists have extensive experience advising on unethical conduct by employees, both in terms of drafting policy rules and what steps to take after you suspect an instance of such conduct. We can advise you about making an investigation, suspending the employee(s) involved, the relevant privacy aspects, and the question of dismissal. We can also advise you about the levy of attachments and recovery of damage.