Administrators are currently selling the assets of Melissa Caddick, who parted her family and friends with around A$23 million in a Ponzi scheme. Ms Caddick’s severed foot was found on a New South Wales beach three months after she mysteriously vanished from Sydney. I still find people who are convinced that she cut off her own foot and made a getaway.
It is common to witness a lot of hand wringing over these stories, and to hear that everyone close by was shocked. They say, we had no idea. But the sad truth is, we do have some idea. The signs are always there.
Today we know, thanks to Kate McClymont of the Sydney Morning Herald, that Ms Caddick started where all fraudsters start – with smaller transgressions.
‘In one of her first jobs, Caddick was caught forging the boss’s signature on cheques and was fired. In her next job, as a financial planner, she found a fresh scam to swindle her clients.’ This fraud simply involved Tipp-Ex. Caddick doctored forms to give herself twice the fee she was entitled to.
The easier signals of a future capacity for fraud lie in the recruitment process. McClymont also reveals that Melissa Caddick claimed to have degrees she did not have, and had told some staggering whoppers about her achievements on her CV. This deception, in order to gain a personal advantage (the basic definition of fraud), could have been verified at the point of employment. It only needed some local calls, but either the checking was not done, or the findings were ignored, because, quite frankly, the advice can be ignored.
I’ve been there. I’ve lost battles over candidates and existing employees because a manager was happy to look the other way. Problematic job history? Yes, he’s a bit of a character, but once you get to know him… CV whoppers? The ‘everyone does it’ defence is trotted out. I’ve argued with managers who saw no harm in lying to immigration, or tax, or social security on behalf of an employee. Perhaps there were people in Melissa Caddick’s employment history who said, ‘hang on. I think this girl’s dodgy.’
Aiyesha Day, Associate Professor at Harvard Business School has done some interesting research in the screening of top executives and asked the question – Can we tell who will go astray?
With some assistance from private investigators, she researched over 1,000 US executives and found that 18% of them had citations for everything from minor traffic offences to driving under the influence, disturbing the peace, drug crimes, reckless behaviour, domestic violence, and sexual assault. Day and her Harvard colleagues went further and asked, in the companies of those executives, is it more or less likely that there will be reports of fraud and, is it more or less likely that this CEO will be involved? Surprise, surprise. The answer to both questions is Yes.
Warren Buffet would agree. He once said that he looks to hire leaders with intelligence, enthusiasm, and integrity. But if they don’t have integrity, he believes, the first two (traits) will kill your business.
Leaders and Senior Managers are paid to set the standards in behaviour, and yet, I’ve seen my share of misdemeanours coming from managers themselves, ranging from stealing office equipment (the wife needs a printer, and it needs replacing anyway), to damaging assigned property in order to get something new, to simply lying about distances travelled, meals taken, or gifts purchased that never made it to the client.
I have learned to look closely at any manager who grows unusually anxious when it’s suggested that the company use a different supplier, declare any conflicts of interest or special gifts or impose any controls on procurement. We should all look twice when a manager with the ability to grant contracts, seems unusually reluctant to take leave for more than a day or two. It can appear to be commitment. In fact, it might be something very different.
You can find yourself in a workplace where fraud and theft are put down to the ‘culture’ and you can be told that you are not a team player. Take that as a compliment.
We encourage people to speak up about safety, and to stop a task if they see something dangerous, because ‘the standard you walk by is the standard you accept.’ Near misses and minor injuries are warning signs of bigger accidents to come.
The same is true for fraud and widespread theft. It all starts with the smaller things and the mindset that it’s what we all do. But it is not what we all do. If you speak up about what you see, and you are ignored, or even side-lined or punished, then best get out of there before you stop noticing.