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Company crooks on the line.

If you are a security director for a company that manufactures or sells pharmaceuticals, computer chips, clothing, cosmetics, or anything else that is highly marketable, chances are employee theft is a big problem in your company. If it's not, that's probably because you have a highly effective program in place or you are denying that the problem exists. But what about a company that manufactures or sells products that are not highly marketable - that is, marketable in the sense that products, when stolen, cannot be easily sold on the black market? Say, for example, you are the security director of a company that produces oriented strand board, gypsum products, roofing, pulp, and containerboard. Not exactly sexy items for the employee thief. Plus there are the logistics involved in trying to steal such items without getting caught.

After all, it's not a simple matter to walk into a forest, chop down a few dozen Douglas firs, then try to sell them to the local lumberyard without raising more than a few eyebrows somewhere along the line. That's not to say that employee theft does not happen at this company. It does. The company is the Georgia-Pacific Corporation, a major manufacturer and distributor of pulp, paper, and building products. Headquarted in Atlanta, the company employs around 56,000 people at more than 500 facilities nationwide and owns or controls more than six million acres of timberland in North America. But the kind of theft the company faces is more fraud related. "Our problem involves fraud where a scheme is devised to bilk the company," says George J. Foster, Georgia-Pacific's director of corporate security. "For instance, a nonexisting company was formed, and we got invoices from this company for supplies we never received." The fraud, he adds, is usually internal. Before becoming the director of corporate security, Foster was the security director of the company's Distribution Division, which at the time (in the 1970s) was the largest division in the corporation. The division was also experiencing a high number of thefts. When Foster was appointed to his current position, he wanted to do something about theft, not just in the Distribution Division but throughout the company. The answer came to him after he read an article about an employee theft hot line run by the General Services Administration. He was also aware that Eastern Airlines had a hot line. So he contacted a colleague of his who worked for the airline.

What developed was a simple, yet highly effective program for combating theft at Georgia-Pacific. For 10 of the 11 years the hot line has been in operation, it was specifically a theft hot line. Late last year, though, the scope of the hot line was expanded.

Today, Georgia-Pacific employees around the country can call an 800 number - the "Business Conduct and Security Hot Line" - at any time of the day or night to make an anonymous report of theft, OSHA violations, sexual harassment, safety violations, and anything else that falls under the realm of "business conduct and security."

In setting up the program, one of Foster's goals was to keep costs down, and so far he has managed to do that. The direct cost of the program: around $100 a month - the cost of the WATS line. Every 18 to 24 months there's the additional cost of printing posters advertising the hot line, which are sent to all Georgia-Pacific plants, mills, distribution centers, and sales offices - more than 500 locations in all. The hot line number is also advertised through the company's monthly magazine.

The low cost is the result of a couple of decisions Foster made early in the planning process. For example, instead of hiring an outside agency to administer the program, Foster chose to handle it himself with the help of his secretary, Cindy Jones. He answers all the calls, and when he's not in, an answering machine picks up the calls.

Also, even though similar programs offer a reward to employees who provide information, Georgia-Pacific opted not to take that route. "Eastern Airlines had a reward system, which it believed was an inducement for people to call in," says Foster. "We discussed the idea [at Georgia-Pacific] but decided that we didn't want to have a reward system for somebody to turn somebody else in."

If the program sounds more like a way for an employee to fink on a friend than an effective solution to fighting wrongdoing, it's not, assures Foster. "When the program was first started, one of our concerns was that we were going to get a lot of disgruntled employees calling in to give other employees a hard time. Fortunately that hasn't happened.

"I think employees get to a point - and I've actually had people tell me this - where they say, |Enough is enough.' They just can't take it anymore," says Foster. "Or, an employee leaves the company, and he or she feels the company ought to know what has been going on. The person has the attitude of |I don't have to deal with the problem anymore because I'm leaving, but my friends who are still here shouldn't have to put up with what's going on.'"

When an employee leaves the company, he or she is asked to fill out a posttermination questionnaire. A section of the questionnaire deals with theft, fraud, and misappropriation of assets, and the employee is encouraged to furnish any information he or she might have on wrongdoing.

But many employees do not wait until they leave the company to report incidents of wrongdoing. When the scope of the hot line was expanded late last year, Foster received nearly 80 calls in four months.

Roughly 25 percent of the calls involved reports of theft. The rest of the calls involved allegations of business conduct violations, issues corporate security does not become involved in. Those cases are turned over to the appropriate department manager since they are management problems.

Foster investigates the reports of theft and fraud. Foster first determines if a violation of company policy or federal or state law has taken place. He then prepares a memorandum that is sent to an attorney in the law department, who consults with the operating vice president to determine whether the report should be handled administratively or whether an investigation is warranted.

When an investigation is warranted, "I'm kind of like Jack Webb in Dragnet," Foster. "I get all the facts together so management can make a decision. I'm helped in this regard by an effective internal audit team."

If there is sufficient evidence based on the investigation that an employee has stolen from the company, that employee is terminated. When an investigation reveals that a federal or state law has been broken, the information is forwarded to the appropriate law enforcement agency. What happens after that is up to law enforcement.

"In essence, the ball is in their court," says Foster. "Our posture is that we don't push for or against prosecution. If they choose to prosecute, we'll furnish evidence, we'll furnish witnesses, we'll cooperate and testify. We will do whatever is necessary in order to fulfill our civic duty."

In some instances the court may direct the guilty person to make restitution to Georgia-Pacific. "Sometimes employees will agree to pay back what we can prove has been stolen," says Foster, but adds, "Many times they don't have the wherewithal to pay us back."

Without the hot line in place, foster is confident that employees who steal from the company would be caught - ventually. The hot line simply speeds up the process.

The Distribution Division, where Foster worked before becoming corporate security director, is a case in point. "The high inventory shortages the department was experiencing were reduced significantly soon after the hot line went into effect," says Foster.

"I think it's a big deterrent," he adds. "If you're thinking about ripping off the company, you have to be concerned that there might be somebody looking over your shoulder who is going to call the hot line to report what's going on. It's not as easy to rip off the company as it was without the hot line."

If there is one drawback to the way the hot line functions, it is the lack of information Foster receives when a call comes in after hours or when he is out of the office. Because callers can remain anonymous - and most do - Foster cannot call the person back for more information.

"When you talk to the person, you can get all the information you need," Foster says. "But if you are not here when a call comes in, sometimes the information is so sketchy that it is difficult to initiate an investigation or determine whether there is a problem."

Even so, Foster does not have plans to change the way the hot line is run. He does not see a need since so few calls come in after hours or on the weekends.

Foster knows that what works for Georgia-Pacific is not going to work for every company. Whether a hot line is staffed around-the-clock, offers rewards for information, or is administered by an outside agency - as well as a number of other issues - depends on the size of the company and how pervasive a problem internal theft is.

Aside from having senior management's blessing, Foster offers this advice for companies thinking about setting up a hot line: "You've got to sell it to the employees. You've got to convince them it's really for their benefit. Because when employees steal, it affects the bottom line - it affects whether an employee gets a raise and how big that raise is."

Like any investigator, Foster has his share of frustrations. "I don't win all the time. Sometimes I get to a point where I just can't prove something is illegal. I have to walk away and leave a person in place I know shouldn't be there." But the satisfaction for Foster comes from knowing he's done all he can: "I give it my best shot, then I move on."
COPYRIGHT 1992 American Society for Industrial Security
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1992 Gale, Cengage Learning. All rights reserved.

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Title Annotation:includes related article; white-collar crime
Author:Addis, Karen K.
Publication:Security Management
Date:Jul 1, 1992
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