Techies Robbing Companies With Procurement Fraud

from the more-common-than-you-may-think? dept

These days, with the publicity surrounding the Enron trials, the idea of companies setting up elaborate schemes using shell corporations isn’t that new. In the Enron case, it appears to have been a corporate effort to do so. However, there are plenty of cases coming to light of employees setting up shell corporations to rob their own employers. Five years ago, we wrote about a “Business Development” VP at Cisco who was caught setting up an elaborate scheme of shell companies and fake venture capital firms to divert plenty of Cisco money into his own bank account. When accused, he first claimed it was simply his effort to “think outside of the box,” which is an interesting defense. However, Baseline Magazine has a collection of articles suggesting that this type of activity is actually more common than many believe, and that it’s often the IT staff, with their huge budgets, that are able to set up such procurement fraud scams. The article has four examples of techie procurement fraud, including the NY City Medical Examiner’s office using procurement fraud in the wake of 9/11 and the Canadian Department of National Defense robbing tax payers blind through shell corporations. However, perhaps the most stunning is the story of the restaurant chain Buca, which was the victim of procurement fraud from two top execs, who were so blatant as to set up one such shell corporation in the same building as Buca’s headquarters and then billed Buca for the office space.

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Comments on “Techies Robbing Companies With Procurement Fraud”

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James Savik says:


I have served as a “tekkie” for 25 years and never, ever taken anything bigger than a note pad.

I never lost anything other than a PC and a telephone stolen in a robbery.

One thing that I have noticed is that many “tekkies” are very young when they are hired and do not have proper oversight. I you hand a kid that isn’t ready too much responsibility and then fail to guide them, do not be surprised when the F-up.

Oversight of expenses is a management function and when it is not exercised, a management failure. The sad part is that many managers don’t know enough about technology to properly oversee this function.

|333173|3|_||3 says:

Things I have heard

One of my uncles worked as an inspector in HM Docks, Portsmouth, and dicoved that one dockyard employee had painted his entire house (inside) in battleship grey! When my family first moved into one house over ten years ago, the curtatins were made from an identical fabric to that used by British Rail for carrige curtains (he worked for BR), and there was a concrete patio over 1′ thick, made from an entire concrete-mixer load of concrete. One of the preceing occupants had had a friend who drove a comcrete mixer and he had “lost” an entire load of conctete! I coukld go on for hours, but these are some of the more interesting stories.

Jerry Kew (user link) says:

Very few new tricks in the world

many years (30!) ago I went on a fraud course to understand it in order to build systems naturally defensive to fraud. We were taught that there is nothing new. Apparently, in the days of the British Raj in India, a District Officer spent twenty years putting up government buildings (schools, police stations, etc etc), and then died. His successor then reviewed his predecessors work and discovered 5% simply didnt exist, he then spent the next ten years demolishing the non-existant buildings as ‘unfit’, and charging for knocking them down! Procurement and disposal collusion without ever meeting!

All the best, Jerry

AnonymousA says:

Re: Does techdirt really believe that article?

Give me a break. Does anyone really believe the obviously flawed theory that IT is rampant with stealing? It’s just another “Down-with-IT” study done by those who don’t understand computers and fear & hate those who are computer experts. I’ve been in IT for over 10 years and the idea that fraud in IT is very common is laughable. First of all, companies begrudge every dollar that they spend on IT because the IT department is not a revenue-producing dept – so they are always examining the IT budget for ways to cut it or steal money away from it for other departments. As an additional thought, I’d bet you that if you add up all the times that corporations have stolen hard earned money from their customers via poor quality & support, stolen time from their employees, and stolen money from the future stability of a company by outrageous pay for executives…. you’d find that any employee thefts are rare and small indeed compared to the money wasted by those who function as top corporate leadership.

Jerry Kew (user link) says:

Re: Re: Does techdirt really believe that article?

“so they are always examining the IT budget for ways to cut it or steal money away from it for other departments”

Well, I have built systems for 30 years, and it is this arrogance from what is an overhead department (IT) that has given us a bad name. As for fraud, I have seen quite a bit over the years, and IT is a good area to do it in because the systems are usually guarded by ‘knowledge squirrels’ who think IT knowledge is power, and not that IT is there to serve the company.

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