The Spying Game

By Shabi, Rachel | Financial Management (UK), September 2000 | Go to article overview

The Spying Game


Shabi, Rachel, Financial Management (UK)


It's easy to dismiss managers who whinge on about staff wasting time surfing the internet and stealing the odd pencil as paranoid, but fraud is a major issue. Rachel Shabi draws the fine line between responsible caution and Big Brother-style intrusion

Employees are so devious, aren't they? If they re not planning their next holiday over the internet, they're wasting time e-mailing jokes to their mates. And if they're not currently on-line, the chances are they're working out other ways to rip you off -- whether by embezzling millions or just by ransacking the stationery cupboard.

This may sound like the ramblings of a paranoid control freak, but the exaggeration masks a serious issue. In a working environment of delayered management and easy-access information systems, how do companies protect themselves against abuse by staff?

The most notorious form of abuse, highlighted in such high-profile cases as the Nick Leeson scandal at Barings Bank, is fraud. But beyond such famous examples, fraud is a surprisingly widespread problem -- the annual cost in the UK is estimated at between 5 billion [pounds sterling] and 20 billion [pounds sterling].

Andrew Durant, partner in the fraud unit at Arthur Andersen, says that firms have started taking fraud a lot more seriously over the past year. "Historically, companies have backed away from reporting fraud, fearing embarrassment to directors and shareholders, but that attitude has changed, he says. He points out that three cases in a row have been reported recently, whereas in the past this would probably happen three times over five years.

General population profiles show that 25 per cent of people will commit fraud, whatever the circumstances, and 25 per cent wouldn't dream of it, regardless of circumstances. That leaves 50 per cent who could go either way depending on their situation (floating frandsters?). This shows that there is a substantial potential for fraud in any company.

"In our experience," Durant says, "75 per cent of fraud is by senior managers. These people have the opportunities and axe in a position of power, so their decisions are unlikely to be challenged."

So fraud is an everyday, real issue and not just movie material. Meanwhile, over in cyberland, things are just as serious. One of the main concerns with the on-line working environment is now termed "cyberslacking".

According to Websense Inc, providers of employee internet management solutions, a staggering 60 per cent of all on-line purchases are made during working hours, while 30-40 per cent of internet surfing is not business-related. "Having a computer on your desk at work is like having a TV switched on all day," says Geoff Haggart, vice-president of Web-sense Europe. "People are constantly bombarded with adverts, enticing them to go and visit new sites and see the hottest products in the marketplace."

But things can get a lot more serious than mere time-wasting. Anne Jones, employment law solicitor at CMS Cameron McKenna, reports that e-mail is now the most common method of workplace bullying and harassment. "E-mail is private, so it is easy to be cavalier," she says.

She cites a ease where a woman sharing an office with male colleagues was subjected to sexually explicit pictures, which were generally circulated via e-mail. "She resigned and her claim of sex discrimination on grounds of harassment was upheld," Jones adds.

And the ways in which e-mail is open to abuse do not stop there. Jones cites a case where a company was sued for making defamatory statements about a competitor on the internal e-mail system. There are also instances where companies find themselves in contractually binding situations because the necessary caveats are omitted from e-mail documents.

The potential for this kind of disaster is enough to make employers introduce Big Brother-style surveillance systems. But that is not such a good idea, according to Mark Hastings, policy adviser at the Institute of Management. …

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