It had been a particularly slow night. The plant security guard had just made his rounds on this Sunday evening shift. As soon as he passed the weighing scales, he could enter the guard shack and get off his feet.
Challenging a curious incident
However, on this night, he noticed the waste vendor’s truck sitting half on and half off the scale. He stopped dead in his tracks to see if the truck would back up and completely sit on the scale. It never did. The observant guard walked up to the truck and challenged the driver who seemed surprised.
“Hey, you’re not weighing your truck properly.”
The driver fumbled for a response before replying, “Sorry, I was on the phone with a friend. I didn’t notice it.”
But this security guard had the presence of mind to demand the driver’s phone. The driver was caught off guard and surrendered the phone. The guard then pulled up the most recent incoming/outgoing calls and saw no calls during the last 30 minutes.
“I don’t think so.”
“You don’t think so what?”
The security guard was frank, “You haven’t used this phone in over half an hour.”
The truck driver sheepishly acknowledged the fact.
| It was decided to install CCTV covering the weighing area and scales – no easy feat due to poor lighting |
Preventing crime as it happens
Knowing the driver was lying, the security guard ordered the truck back on the scale for a correct weighing and advised the driver that he would report the incident.
The security guard wrote up his report and handed it off to his supervisor who, in turn, contacted the local corporate investigator. This investigator was soon on the phone with his boss at corporate headquarters on the other side of the world.
Together with Security, they decided to install CCTV covering the weighing area and scales – no easy feat due to poor lighting. However, once completed, they waited. They would not have to wait long.
For the next two months, the waste vendor trucks, filled to the brim with production waste, black-and-white paper and other waste products from the plant, would stop on the scale only for a moment and then drive the front half of the truck off the scale for weighing. It was obvious that the vendor was cheating the company by only paying for half the waste.
After two months, it was decided to catch the next cheating driver “en flagrante.” Sure enough, the next truck went half on and half off the scale and was weighed. Security then asked the unsuspecting driver to park his truck and invited him inside the building to talk to a supervisor.
| The driver signed an incriminating statement about the scheme and his role therein. They sent him on his way asking him to keep it quiet |
Waiting for the driver in a large office was the local investigator and his close friend, the Head of Security. After a difficult interview, the driver admitted to cheating on the scales over a two-year period—he claimed that some of the scale cheating was done at the direction of the vendor’s management, while some of it he did himself by “ripping off” the vendor—which he acknowledged was dangerous.
Working with authorities
The driver signed an incriminating statement about the scheme and his role therein. They sent him on his way asking him to keep it quiet—they would see what they could do for him later on.
In the meantime, Corporate Investigations had received a due diligence report on the vendor company which contained disturbing news—the company and its managers were associated with a countrywide waste management mafia.
The report suggested that the vendor had a reputation for thefts and involvement in numerous lawsuits regarding thefts and embezzlement. Shockingly, no prior due diligence had ever been conducted on the vendor.
Fortunately, the plant’s finance and audit team had maintained good records over the past 5 years and were able to re-construct the amount of waste going out the plant door and the amounts being claimed and paid for by the vendor.
The discrepancy and loss stood at a multi-million dollar figure. After consulting with the local police authorities and company lawyers, it was decided to pursue a civil case against the vendor.
Pursuing legal action
The regional lawyer, the Head of Investigations, the Head of Security and the CFO invited the vendor to discuss the problem. Some of the evidence was shown to the vendor’s CEO who became indignant and, in order to save face, promised to fire the truck drivers and to repay any losses for the last two months.
| Inter-dependent entities - security, investigations, finance/audit and legal - combined their resources and agendas to form a unified front |
That was not enough for the company and a protracted legal battle ensued which lasted several years and resulted in the vendor’s paying almost the entire amount in instalments. The vendor was dropped from the contract and internal controls strengthened—the only plant employee dealing with the waste issue left the company and was replaced by two individuals.
The plant also began paying more attention to the waste process and less to the production side.
Several “lessons learned” come to mind. First, the tripwire came in the person of an astute and well-trained security guard who exhibited some of the best characteristics you want to see from men and women in that profession. The Security Department was also adept at installing the CCTV and capturing the fraud live on videotape.
But a far greater lesson was learned—of what can happen when inter-dependent entities (security, investigations, finance/audit and legal) within a company combine their resources and agendas to form a unified front. The results speak for themselves.