Investigating Executive

catherinetnc · December 2004

Any ideas about how to investigate claims by other execs that one particular exec is gambling with company money and padding expense accounts bigtime?

I think the guy is a jacka$$ and most people who work for the company do too. He is only accountable to the CEO who seems oblivious to this guy's behavior.

I have been told to investigate but because of my attitude (and the rest of HR) I'd like to get a third party to do the interviews. So that if we find anything incriminating through interviews of others, we can say that a disinterested third party handled the investigation.

I am confident that this guy will have to take a walk if anything can be substantiated (ie I know the CEO will have to take action if anything is turned up - so I am not concerned about follow through after investigation.) I just don't want the results questioned.

Any ideas?

Thanks!

Catherine

Crout · December 2004

HR is supposed to be "the third pary" in cases like this. My advice would be to put your attitude aside and function like a professional. Is this your first time posting? Welcome to the Forum.

catherinetnc · December 2004

Gee, thanks for the "welcome." No, it is not my first time posting.

Happy Holidays.

SMace · December 2004

You have to have the CEO on board. You know him/her better than I do so you should know how to approach them.

It sounds like a group maybe trying to railroad him out (including you) based on circumstantial evidence. Why do you think he is padding his account? Did someone say it at the water cooler and now it's a fact?

It really bugs me when people think someone's an ass and they try to get them out based on other potentially petty stuff. If he's an ass deal with his behavior. Don't get sucked into the rumor mill with people that hide behind issues instead of dealing with them head on.

Drop a hint to the CEO to scrutinize EVERYONE's expense account and then get to work dealing with his behavior.

catherinetnc · December 2004

I suppose I should have been more clear but it was the CEO who told me to investigate.

If I were in charge, the guy would be gone yesterday. I told the CEO that. (I have significant ownership interest in this company so I think I am entitled to give him my opinion.)

I think a third party investigator would protect the alleged wrong doer from bias. I am trying to do the right thing here. For everyone in the company. And I certainly recognize the guy's right to fair treatment (even if it is just so that we can defend ourselves in court if we end up taking action).

This person has been talked to about his bullying behavior by me (although I am not his boss), by others and by the CEO. His behavior will not change, and the CEO will see nothing wrong with this guy unless the allegations can be substantiated. And my guess is that they can be.

Also, our company never "bought business" until he came along. I have seen his expense reports - they are obscene. And my guess is that an objective third party party would think so too.

I am old enough to know that where there is smoke there is generally fire.

SMace · December 2004

I understand a little better I think. In the first post you said he is gambling with company money and padding his expense account. Then you say he's "buying business". I think those are two completely different things. Has anyone ever talked about his excessive spending? Saying nothing is as good as condoning it. Maybe he thinks he supposed to "buy business" because that's the way he's always done it.

It doesn't sound to me that anyone needs to investigate if he is in fact only "buying business". To me that means spending extravagantly on clients. If the clients are the one's receiving the goods, what's to investigate?

You say he will not change his behavior. For goodness sake, you are an owner. What you need to do is sit this jackass down, define the behavior he is to adhere to (interpersonal and expense account) and if he doesn't follow it fire him. Good luck.

catherinetnc · December 2004

Thanks for your response-
My suspicion is that he buys business and innappropriately uses company funds. And the two are interrelated because the "business buying" alleged entails gambling and women for both he and his customers.

All allegations. Not substantiated. But apparently this guy has a reputation and a big mouth.

You're right about sitting him down. As owners we have tried to keep hands off so the CEO will deal with the issue. But that hasn't worked.

Thanks again-
Catherine

marc · December 2004

A third party is not a bad idea in my opinion. I have been involved in financial fraud investigations - they can be very convoluted and the money trail can be obscure and difficult to follow. If the Exec being investigated is particularly savvy, a forensic accountant is a good idea or a bank/credit union/ savings and loan type investigator can cut through these things very quickly.

Since this could turn into a criminal investigation - a professional might save the evidence trail and a lot of grief.

catherinetnc · December 2004

Thanks for your advice-

I am a professional. I am an attorney who typically deals with non-HR, although lately it seems to be all that I am doing. I am trying to protect our HR department from any backlash that may come about.

This is a small company. My family hired the CEO when we bought the company that he worked for, and merged it with our own. He has a blind spot when it comes to this person. I have 250 employees to protect. I'd bet that about 200 of them have met this man (the alleged wrong doer) and feel there is something going on with him. Morale has taken a nose dive because of this one individual. That is one reason I take the accuser's allegations seriously.

It seems to me that a third party investigator would be the best way to protect the "alleged wrong-doer". The CEO asked me to investigate the matter. I am too close to the situation - give me some credit for recognizing that.

So, even if I did not have an attitude you can see that I am an "interested party" in every sense of the word.

I thought about a forensic accountant as well. I really thought someone might have the name of a company that does executive investigations.

marc · December 2004

[font size="1" color="#FF0000"]LAST EDITED ON 12-21-04 AT 01:24PM (CST)[/font][br][br]The last time I was involved with one of these, I got in contact with an executive at our company's bank. This individual referred me to a retired investigator from the AG's office for that state. I contacted the investigator, interviewed him and found his skill set to be right on target with what I wanted. He did the whole thing start to finish, including an interview with the suspected embezzler. Got a confession, etc.

Perhaps you could take a similar route. Since you are an attorney, perhaps you could contact some of your associates that have banking clients - surely they would have some names that could handle this sort of confidential matter. Just a thought.

Edit: I meant a professional investigator - was not intending to impune your professionalism.

NM _Tom · December 2004

I would be cautious about involving a third party. By involving a third party, you may invoke the Fair Credit Reporting Act. If it does then you would need his consent to conduct the investigation and you would be required to provide him a copy of the investigative report. Both are significant potential problems. I'm not an employment attorney, so I dont know if FCRA can really be applied.

In either case, I would recommend an in-house investigation.

Other thoughts or opinions?

catherinetnc · December 2004

Yes, the FCRA occured to me as well. It doesn't apply to all aspects of investigation though.

I am tempted to gather all the expense reports for the year (for everyone who turned one in) and have them independently audited by forensic accountant.

I also agree that silence implies consent and that the person in question could argue that his acts were ratified by CEO (who approved his expense reports).

SamanthaQ · December 2004

Hi Catherine! I certainly don't envy your position right now! I work at a financial institution and we had one of "those" types of managers here. When we addressed the behavior or wrongdoing he always had some stupid excuse. Sometimes the way he did business was not always above board in my opinion.

I've not had to use a third party investigator yet but we have a local company in our town that does security for buildings (i.e provide security guards or have someone patrol the grounds) and they will also do investigations/interrogations etc....do you have a local business that might be similar? The owners of the one I am speaking of have a background in police work and interrogation and are skilled at getting information out of people. I'm in Michigan and would be willing to give you their phone number - I thought I recalled that they did out of state work as well. Please let me know if want the #.

Do you have a policy on credit card usage and expense reimbursement? That might be a good policy to review to see where you stand. This guy could be using company money to do renovations to his house or go on personal vacations and you might never know it until an audit is done on your records!

It's good that your CEO is recognizing there's a problem. Maybe this will be the issue that gets this bad apple the boot!

catherinetnc · December 2004

Thanks for your kind words-

I got the name of a former policeman who was an investigator for a fortune 500 company in our state - sounds very similar to the guy you mention. He has a security company as well.

Not sure what route we're going yet.

Catherine

Crout · December 2004

Catherine, sorry if my remark caused you any distress. It was more along the lines of "tough love" than anything else. Your situation is tricky, but I still think you should handle this in-house if at all possible. I'd assign this to an upper-level HR person and an upper-level Fiscal person to investigate and develop a file. And yes, those people MUST put their personal feelings aside and do the best job they can do. Hey, we can't choose our emotions, but we CAN choose our actions.

E Wart · January 2005

Doesn't your company have any type of internal audit procedures? If so, why not contact your external auditor (not someone in the Accounting Dept.) and have them come in to look at the books which includes reviewing everyones' expense accounts. If this has been going on long, they should have found it by now.

E Wart

Balloonman1 · January 2005

Catherine,
I did not see this post until today, however I know of two individuals, on in Virginia, the other in Georgia who were/are loss prevention managers who were some of the finest interviewers you will ever meet.
If you did it, they will get you to admit to it. In addition, investigating the paperwork is another area in which they have significant experience. This is what causes most of the internal thiefs to be caught. If you want their contact info let me know.
My $0.02 worth,
DJ The Balloonman

Investigating Executive

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