HR manager’s £100,000 invoice fraud a warning to firms, says lawyer

Last week we reported on the case of the HR manager, Farah Ahmed, from London who was sentenced to three years in prison at Kingston Crown Court for embezzling over £100,000 from two City firms by using fraudulent invoices. The case has been widely reported with the national press largely focusing on how she did it, while the HR press looks at the lessons to be learnt, chiefly spotting the warning sign of this type of fraud. But what about the process itself - the investigation -which led to her being caught? We’ll consider that, and the risks to the business if it’s mishandled.

The police press release provides a good insight into how this crime was committed and how she was caught. 

Ahmed was employed by a consultancy service that was primarily used by automotive companies in market research and intelligence as well as a property and construction company where she held different roles in human resources (HR) departments. During her two roles, her responsibility was to manage the hiring of new employees and internships and the career progression of employees where she was their main point of contact for HR related issues.

In November 2019, Ahmed was dismissed from her work after a formal complaint was made by the office manager. This was in addition to concerns raised more generally by work colleagues about Ahmed’s work ethic and approachability as a HR Manager. The formal complaint was investigated and Ahmed was dismissed after false invoices were found on her computer which were paid to her personal bank account.

After Ahmed was dismissed, four additional invoices were found in her office that had not been processed and were dated after her dismissal. The police say if she had not been dismissed and her fraudulent activity had not been uncovered, this was likely to have resulted in further losses, which goes to show the importance of not shutting down an investigation at the point of dismissal in a case of this sort.

In addition to falsifying invoices, Ahmed also used an email hacking tool to attempt to hack the email of her then Managing Director of the company she worked at between 2015 and 2017. This was uncovered when the MD received an email with a message saying that an email had failed to send. It read: “Hello Ahmed. I have performed the hack and I now have access to the account that is why I am able to message you from here. Please reply me on my mail and let me know if you see this message.” On further investigation, it was revealed that the email inbox it was trying to reach belonged to Farah Ahmed.

Commenting on the impact of the crime, Detective Inspector Nichola Meghji, from the Fraud Operations team, at the City of London Police said: “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.”

Clearly this is not a run-of-the-mill misconduct case and it’s important to recognise it needs handling very differently. 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 explain some of the differences: 

Andrew Herring: “The issue with any sort of fraud compared with that sort of ordinary misconduct situation will be the potential liabilities and risks that the business that the employer faces as a consequence of the fraud. Quite often the initial discovery of wrongdoing may just be the tip of the iceberg and so, for example, if you take new fairly standard action, in accordance with policies and procedures in response to that, you may not have the full picture and that can have some quite serious consequences. So if the employee has been stealing from the company there may actually be a web of other third parties involved in it, they may be giving money to third parties outside the business, there may be other employees who are acting in conspiracy with the particular individual and so it’s very important not to ‘tip off’ other people who are involved so approaching an investigation in a very cautious manner is the right thing to do in these situations. If the wrongdoing has affected customers, suppliers, then obviously, that all needs to be managed and not taking knee-jerk actions at the start can be very important from that respect. There may be regulatory risks concerned with the wrongdoing, depending on the nature and type of the business that's involved, so in order to manage that risk, and manage those potential liabilities, it's very important to approach the investigation in quite a methodical systematic way. But the response needs to be quick, so it's finding that balance because, clearly, if you're trying to stop ongoing wrongdoing then then you need to be taking swift action. So the usual investigation steps will involve pulling together an independent investigation team to manage things instructing the right expert professionals to support the investigation, ensuring that the crime scene, as we call it, is preserved, making sure that any evidence is preserved and not deleted, making sure that when and if witnesses are spoken to that it's done in a very controlled way and if it’s a witness who is not suspected of the wrongdoing, that they their rights are looked after in that situation, but not tipping off the wrongdoer until you're absolutely sure what the position is because actually, one of the strategies and an investigation may be to actually allow the person to continue what they're doing so you can get better evidence because you haven't got the full picture of the situation. So, all of these strategies need to be taken into account when setting up an investigation into some serious wrongdoing which may amount fraud within an organisation.”

Last week Andrew talked to this programme about the warning signs of employee fraud of this type, the behaviours which should alert HR to a risk. That’s ‘HR manager jailed for 3 years after £100k invoice fraud’ and is available for viewing now from the Out-Law website.

- Link to HRNews programme: ‘HR manager jailed for 3 years after £100k invoice fraud’