Page 203 - Encyclopedia of Business and Finance

eobf_C 7/5/06 2:57 PM Page 180

Crime and Fraud

Supply and equipment pilferage. Another example of security typically monitors employees who have exhibited
internal employee criminal activity is the theft of business strong negative feelings toward the business or a supervisor.
supplies and office equipment. Businesses are concerned
with employees who steal supplies and office equipment, External Crimes. Among the more common external
such as laptop computers, paper, paper clips, pens, print- crimes committed against a business are burglary, robbery,
ers, and so forth. The theft of such business property shoplifting, and walk-in office/factory thefts.
reduces business profits and, if its stock is publicly traded,
Burglary. Burglary is usually thought of as breaking
earnings for its stockholders. The consequences for dis-
into a building with the intent of committing a felony, or,
honest employees who are caught engaging in these activ- in particular, stealing something. Although any business
ities include job termination and criminal prosecution. may be burglarized, individuals who commit burglary
For more information about preventing employee pilfer- tend to target those firms where they are likely to receive
age, see the National Federation of Independent Business a high monetary return for their efforts. Financial institu-
Web site (http://www.nfib.com/object/3289337.html). tions, such as banks, are often targeted because they
Travel expense abuse. Employees who travel for a busi- normally have large amounts of cash or valuable securities
ness as part of their jobs may commit fraud by putting on hand. Almost every major financial business uses a
personal items on the firm’s expense account. For exam- variety of elaborate antiburglary devices to deter potential
ple, employees may include higher amounts on their burglaries. Financial institutions also use extensive net-
expense voucher than were actually paid. This practice is works of electronic equipment to notify law enforcement
common when reporting the amount paid in the form of when burglaries do occur. Most major businesses now
a tip, as usually no receipt is involved. Individually, the employ a wide variety of antiburglary strategies in order to
funds embezzled by one employee in this way might not provide maximum security to their offices and employees.
add up to much, but collectively this type of crime could For further information on burglary prevention strategies,
cost a business many thousands of dollars each year. see the Los Angeles, California, Police Department Web
Vandalism and sabotage. Another type of internal site (http://www.lapdonline.org).
crime is an employee’s intentional destruction of business Robbery. Robbery is committed when a criminal uses
property or equipment. The employee does not receive force or the threat of force—usually with a weapon, such
any monetary benefit from destroying business property; as a gun or knife—to steal from a business during its nor-
rather, it is done to get back at a business or a supervisor mal operating hours. Robberies are very serious because of
for a myriad of reasons, such as being passed over for pro- their potential for bodily injury of employees and/or
motion, a pending layoff, or a poor performance evalua- customers who are on the premises at the time the robbery
tion. Traditional employee vandalism involves destruction is committed. Moreover, any property or money that
of physical property, including computer equipment, is stolen also hurts the business from a profit-and-
office furniture, business vehicles, or other business prop- loss point of view. For further information on robbery
erty. Physical destruction of business property can be prevention strategies, see the Colorado Association of
deterred by the use of surveillance equipment and the vis- Robbery Investigators Web site (http://www.co-asn-
ible presence of adequate security staff. For more informa- rob.org/Default.htm).
tion on preventing vandalism see the Boulder, Colorado, Shoplifting. One of the most prominent threats to any
Police Department Web site (http://www.ci.boulder.co. retail business is shoplifting, which costs businesses mil-
us/police). lions of dollars in lost sales and stolen merchandise each
A real threat to modern businesses is efforts to sabo- year. Unfortunately, the cost associated with this type of
tage computer systems. An employee with extensive criminal activity is passed on to honest consumers in the
knowledge of a business’s computer system could create a form of higher prices. Because of the high costs associated
computer virus or some other highly technical method to with shoplifting, many retail businesses use sophisticated
incapacitate some or all of the business’s computer system. electronic surveillance systems in order to deter shoplift-
The destruction or failure of a business’s computer system ing and to catch those who commit the crime. Most retail-
would cause enormous trouble for the business. In addi- ers have adopted a zero-tolerance policy relative to
tion, if business files were to be damaged or erased, it could shoplifting and will prosecute anyone caught stealing
cost the business a considerable amount of time and regardless of the amount. The combination of strong
resources to fix them, not to mention the lost sales or poor antitheft measures and vigorous prosecution of those
customer service that might occur as a result. Since the caught has resulted in fewer numbers of shoplifting cases.
computer security issue is so important, businesses nor- For further information on shoplifting prevention, see the
mally discontinue computer access for employees who are Web sites for the National Association for Shoplifting Pre-
going to be separated from the firm. In addition, business vention (http://www.shopliftingprevention.org/main.asp)

180 ENCYCLOPEDIA OF BUSINESS AND FINANCE, SECOND EDITION