By Patrick Avenell
MELBOURNE, VIC & SYDNEY, NSW: Clive Peeters CEO Greg Smith has warned other businesses that you can never be too comfortable with your fraud-prevention controls. Prior to discovering an employee had fleeced the group of almost $20 million over a number of years, Smith thought his organisation had the controls in place to recognise embezzlement.
In an interview with Current.com.au, Smith, who is an accountant by trade, said that identifying and preventing internal fraud requires sophisticated controls and separation of duties as a cornerstone of protection. He thought Clive Peeters had that.
“We thought we had them,” Smith said. “We run a very tight ship, we run a very professional business, and we thought we had them. But you never stop learning, and therefore you have to have your eyes open at all times, you have to be alert to signs outside of the business that might have given you early warning systems.”
Not only was Smith caught unawares by fraud itself, the magnitude of the deception was also a shock. As a publicly listed company, Clive Peeters is required to go beyond private companies in its documentation and reporting of internal figures. Smith said Clive Peeters’ records are as professionally kept as any other company. Essentially, Smith warned all other business they need to be extra-vigilant.
“As a public company, I’d put us up there with anybody in terms of the quality of records. It just goes to show these things can happen notwithstanding all of that: you just have to be very alert, and all of your team around you [has] to be very alert, to anything that may have given you early signals.”
Regardless of this otherwise disappointing episode, Smith said that ultimately his organisation has been lucky. Whilst they were not able to stop the fraud before it reached monumental proportions, a lot of the cash spirited away from the company will eventually be recouped.
“It’s not a nice process for anyone to go through, but we are very lucky that we have got onto this when we did, and we’ve been able to recoup the situation as well as we have.”