Employee fraud: Recent developments in Australia

Unfortunately, Melissa Caddick is not Australia’s only corporate swindler. Fraudulent conduct in the workplace still occurs all too often and is incredibly costly for employers [financially and reputationally]. Two recent, lesser-known cases concerning senior employees serve as timely reminders of the need to ensure appropriate checks and balances exist across a business to deter and detect unauthorized expenditure of company money.

False Expense: Director Steals Millions To Pay For Personal Luxury Items

Proceedings were recently commenced in the Federal Court of Australia by Deloitte Services Pty Ltd and Deloitte Financial Advisory Pty Ltd [collectively, Deloitte] against a former director, Mr Paual Quill for misuse of company funds. Deloitte claimed that between 2016 too 2022, Mr Quill incurred expense of approximately A$3 million on his work credit card for personal items, ranging from fine art, furniture, jewellery, watches and a hot tub [amongst other things].

Mr Quill allegedly submitted fake invoices, by falsifying genuine invoices from third party suppliers, making it seems as if they were for work-related expenses while also creating fake emails claiming to be from a Deloitte partner to further legitimate his ‘con’.

Upon learning about Mr Quill’s deceit, Deloitte dismissed him and reported him to the Australian Securities and Investments Commission, the police and the Australian Restructuring Insolvency and Turnaround Association.

On 19 April 2022, the Federal Court of Australia ordered that Mr Quill repay Deloitte A$3.1 million.

Billing Fraud: Employee Cashes In From Falsified Invoices

Rentokil Initial Pty Ltd [Rentokil] commenced Federal Court proceedings against its former Head of Operational Support and Supply Chain, Mr Jesse Kelly and two entities of which Mr Kelly was the sole director and shareholder.

Initially, Rentokil successfully obtained freezing orders and some ancillary orders against Mr Kelly and the entities on the basis that between March 2020 and July 2021, Mr Kelly misused his position and breached his fiduciary duties by falsifying invoices in the names of third-party suppliers and defrauded Rentokil of around A$3.2 million. The Court has since ruled that Rentokil is owed A$3.38 million plus interest.

The falsified invoices directed that payment be made to one of two ANZ accounts or a CBA account. It was subsequently discovered that the ANZ account were held by Mr Kelly [and one of his entities]. After Rentokil commenced an investigation into these discoveries, Mr Kelly admitted to falsifying the invoices and tendered his resignation. In late April 2022, the Court ordered that Mr Kelly’s and his business’ asset be sold and all proceeds be paid to Rentokil [up to the amount of approximately A$3.5 million].

Protecting your business – how can your business mitigate the risk of employee fraud?

• Ensure there are governance systems where credit card statements and other financial records [i.e invoices] are reviewed and escalated where any anomalies are identified.
• Provide comprehensive and regular risk and fraud training to all employees, but especially financial/ accounts and operative employees.
• Review expenditure authorisations for employees and consider whether dual authorisation is required over certain financial thresholds.
If you suspect that an employee has committed [or may commit] fraud in the workplace, it is essential that evidence is preserved and appropriate action taken, including reporting to appropriate law enforcement agencies.

RN LEGAL has assisted many clients with employment related mattes. RN LEGAL has the experience, expertise, and resources to help you with your employment-related matter. Contact RN LEGAL on (02) 9191 9293 or mail@rnlegal.org if you, or someone you know, requires advice or assistance in relation to any aspect of employment law.