Investigation Advice

We have an employee that works in one of our remote warehouses that has made accusations against his supervisor through one of our managers. He states that the supervisor is selling inventory, taking kickbacks from a trucking company & is also making disparaging comments about him because he "knows too much". We know we need to investigate this immediately, but since these are criminal allegations, we want to proceed very carefully. Should an HR representative fly out there & conduct the invistigation, or should we hire an outside invesitgator to handle it?


  • 8 Comments sorted by Votes Date Added
  • It depends on the level of experience the HR staff has. There are more than HR issues here, such as possible criminal activity as well as investigating inventory and accounting records. You need legal advice.
  • I agree that you need legal advice, but what can it hurt to visit and do an initial investigation. Your presence may stop any further action, if the allegations are true. Interview as many employees as possible and let them know the confidentiality of the investigation.
  • After a preliminary conversation with your legal counsel to obtain counsel about what the legal issues are and what you will need to prove, I would send either the highest ranking HR person from the corporate office or hire an outside investigator and send that HR person with them to the location. When they arrive, they should talk to the accused manager first and tell the manager that allegations have been made that the company must investigate. Don't lose sight of how traumatic this will be for a manager who is not guilty of what this employee claims he/she has done. Do not tell the manager who made the allegations, simply tell him/her that allegations have been made that product is being sold to third parties out of this location.

    Have the manager get the employee group together. The HR person should introduce himself/herself and tell the group that he/she is conducting an investigation into allegations that product is being sold out of this location. Make a strong statement that if this is happening, not only is this stealing from the company, but it is stealing from all the employees since losses like this cut into profits, which cut into money that is available for raises for everyone. The HR person should remind the group that he/she reports directly to the CEO (or whoever), so no one should have any fears about anything they say during the investigation nor will you permit any one who gives the company information to be retailated against. If you use an outside investigator, the HR person should introduce the investigator and say that we want to make sure that this is a top notch, unbiased investigation, so we hired an outside individual to do this for us. Employees should be interviewed one-on-one, including the employee making the allegations (Don't interview this employee first, but work him/her into the mix). Make sure that the person doing the investigation does not mention the manager by name. The investigator should be asking questions like,
    "Have you ever seen or known of anyone selling product to someone else and not recording the sale?"
    "Have you ever known anyone to give a vendors special treatment?"
    "Are you aware of any special favors being done by vendors for an employee?"

    If you get a vendor's name in this investigation, go to the highest ranking individual at that vendor and tell them that you are investigating the fact that someone from your company may be demanding favors from them to do business. Reinterate that this is not how your company does business, that you never want your vendors treated in this manner. Ask if they are aware of this happening. Do not name the manager.

    If you find nothing, you need to express to the manager your faith in him/her and tell the employee making the allegations that you found nothing, that if the employee gets further concrete information you will be glad to hear about it, but otherwise you expect the employee not to make these allegations again.

    One last question, if this is taking place, aren't you having some sort of inventory shrink?

    If you need the name of someone from the outside to do the investigation, please call me at 615-371-8200. Good luck!

    Margaret Morford
  • Allegations of theft, especially where it is possible that company financial records were altered or falsified, usually fall on the “turf” of the audit staff. I would recommend working hand in hand with them, your legal counsel and the corporate management person responsible for the remote facility. This is an excellent opportunity for some cross-functional teamwork.

    If allegations of improper vendor or customer relations arise, your team will need to involve either the Purchasing or Sales organizations, or both. I would wait to confirm that such allegations are creditable before involving anyone other than HR, Legal and Audit. Keep your team as small as possible, and based upon “need-to-know.”

    Both Auditing and HR have their role to play. Auditing can direct their inquiry to the records side of the case, perhaps a full audit of the Warehouse facilities books. HR should handle the "people" side of the inquiry, including interviewing employees. Leads developed in the interviews should be fed to the Auditors for their inquiry.

    I agree with Margaret Monford, you need to interview in an open and non-directive manner. I always prefer to start with a statement about seeking "factual" information-that is what has this employee see with his/her own eyes, or heard with their own ears. While your questions should be open and non-directive, you want employee responses to be as specific as possible. Probe for specific dates, names, and if possible written records to verify the answers you get. Since we are talking about inventory there should be some sort of paper trail the employee(s) can point to for the Auditor to check out.

  • Keep in mind that whoever investigates becomes a witness in any future hearing or litigation; therefore, it's probably best that company hr personnel stay out of the direct investigation. Depending upon company policy and your state law, you would probably be better served to hire a professional firm that deals with employee theft cases (has previous experience working internal theft matters). This situation may require the use of a mole and/or covert camera work which, contrary to what you see on tv, is a highly sophsticated operation requiring very expensive equipment. Also, there is the possiblity that the scale of the loss far exceeds what your informant is telling you. And because the informant may also be involved--trust me, it happens--you should have no further discussions with that individual once you have the basic facts. Let the investigators make whatever further inquiries of him/her that are necessary. Usually there is more than one person involved, if not in the same enterprise, possibly in individual thievery. One of the 1st things I'd do is to acquire the telephone records for that facility and determine which numbers that are not business related are frequently called. It is not unknown for any significant on-going theft undertaking to employ outside confederates. The phone numbers might give you clue as to who, if anyone else, is involved. If that facility tracks vehicles coming on company premises, you need to learn who each vehicle belongs to. Above all, consult your corporate counsel or company attorney before you act. If you don't have one, you might consider hiring one for the limited purpose of advising you through this matter.
  • In addition to stating these allegations are taken seriously (at the proposed meeting), wouldn't you also want to also include a statement that false statements made with malice or intent to discredit are taken equally seriously and state possible ramifications? After all, a lot of time, money, and manpower will be taken to conduct this investigation which would no doubt interupt the work flow to possibly find it was an employee with an ax to grind. Isn't equally important employees be advised what happens on the flip side?
  • This is an easy one. You'll obviously need to conduct an investigation but first, contact your legal department. Obtain attorney/client privilege coverage so that anything uncovered by the investigation is protected by the privilege. Next, if you do not have a security department qualified to conduct these types of investigations, hire an out-side firm to do it. Your attorney should be the only person having direct contact with the investigator(s). Once you've completed the investigation, the investigator should give the findings to your attorney and your attorney should call in Human Resources if there has been wrong-doing and disciplinary action is warranted.
  • Thanks to everyone for their advice. It's been very helpful!

    Our investigation has been inconclusive, so far, and our recommendation is to have a private investigator look into it.
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