HR manager jailed for 3 years after £100k invoice fraud

A London HR manager who stole more than £100,000 by using fake invoices has been jailed for three years. Farah Ahmed, 48, of Barn Close, Slough, carried out her crimes while working in human resources at two different City firms - an American consultancy and a property and construction company. She pleaded guilty to 7 of the 11 offences she was charged with and was sentenced at Kingston Crown Court. The charges included fraud by abuse of position and perverting the course of justice. We’ll speak to a fraud investigation expert about spotting the signs of this type of crime.

The London Evening Standard and People Management both report on this. During her two roles, Ahmed was responsible for managing the hiring of new employees and internships, and the career progression of employees, acting as their main point of contact for HR-related issues. In November 2019, she was dismissed after a formal complaint by the office manager was investigated, and false invoices for more than £100,000 were found on her computer, which had been paid to her personal bank account. The complaint had come after other colleagues had raised issues about Ahmed’s work ethic and approachability as a HR manager. Ahmed used the stolen money to pay off an outstanding debt she had with a debt recovery company for a vehicle loan that she had failed to make repayments on.

Inspector Nichola Meghji, from the Fraud Operations team, at the City of London Police said:

“In any organisation, employees depend on their human resources department to be upstanding with a strong moral compass, to have great judgement and to be impartial and honest in their decision making. Sadly, in the case of Farah Ahmed, this couldn’t be further from the truth. Ahmed abused the privileges of her managerial position to pay off her personal debts. Often, people think that fraud being committed against an organisation is victimless, however the reality is that it can have a direct effect on the employees as businesses rely on profitability to pay their employees’ salaries, health benefits, and health insurance.”

People Management asks the question how common is workplace fraud and what is the cost to businesses. According to recent data from the Association of Certified Fraud Examiners, this type of fraud costs companies globally more than £3.1 billion. The most common form of workplace fraud involves employees stealing or misusing their employer’s resources, often referred to as asset misappropriation. Notably, the study highlights that weaknesses in internal controls play a key role in enabling fraud. Specifically, 32% of workplace fraud cases stem from either a lack of internal controls or instances where existing controls are overridden.

So how do you spot this type of crime? Andrew Herring is one of the lawyers in our litigation team specialising in complex litigation and fraud-related investigations and earlier he joined me by phone from the Birmingham office to discuss that point. I started by asking Andrew about the warning signs, the red flags that HR should be alive to:

Andrew Herring: “The first one from our perspective is people that are working excessive hours, or who don't take the right levels of annual leave that you might expect. There have been some very high-profile cases over the years, where people have been committing fraud and they don't leave work because they need to be in control of the situation in order to ensure that they're not found out, and that things carry on in the way that they would like them to, and they don't get caught. So, it's always worth just making sure you know if people are working excessive hours, or working odd times of the day, and from a pastoral perspective, you're checking that everything's okay with them but then, also, that it's not a red flag of other things going on. For example, on the holiday point, in some regulated sectors businesses will ensure that people take a mandatory two-week holiday during the course of the year just so that if audits do need to be undertaken about what work has been undertaken, those can be carried out safely. Then there will be other things that that might be warning signs, for example, people using unnecessarily complicated working practices. If something can be done simply and openly and transparently it's very likely to be a quite a rigorous process whereas if people are making it overly complicated, then that just creates potential situations that can be exploited, and we see that quite often in the finance teams within businesses. You know, the invoicing procedures, the authorization procedures, if it's too complicated it gives people the opportunity to commit fraud. I think also, and this is difficult one because there is this huge emphasis on data protection and protecting confidential, commercially sensitive information within organisations but, again, if people are taking steps to keep what they're doing secret in a way, which is not appropriate within the business, that might be a marker that they're doing something wrong that they're trying to hide from their fellow employees or management so that's something to keep an eye on. Obviously, people living beyond their means is usually a big marker. I have dealt with multimillion pound frauds where the thing which has caught the suspicion of the board has been the flash car in the car parked outside the office when everyone else is driving very modest vehicles. So, anything that suggests that - the holidays or anything out of the ordinary like driving flash cars, overly expensive jewellery, that sort of thing. There might be absolutely perfectly justifiable reasons for that, but if it doesn't add up then it's worth just then thinking well, do we need to take a closer look at this individual? Then in terms of when you're thinking about well, is someone, you know, maybe doing wrong doing, we all have very stressful jobs but,  actually, a change in someone's personality can sometimes be a marker for people that are doing something wrong because, quite often, the stress of trying to have multiple lives at the same time can actually cause people to behave differently in the workplace and again, from a pastoral perspective, that's something that needs to be looked at and to check that people are okay, from mental wellbeing perspective, etcetera, but it might be the red flag. Then the classic in that area where we have dealt with cases in the past is where employees have a gambling habit and, actually, they start turning to defrauding their employer in order to generate the money they need to maintain their losses on a gambling account and, unfortunately, that is something we've come across a number of times and people's personalities and their behaviours have changed because they're trying to juggle their financial affairs outside of work.”

If you would like help in this area please do get in touch – Andrew’s contact details are there on the screen for you. Alternatively, you can contact your usual Pinsent Masons adviser.