The ‘Inside’ Job

By Bridget McCrea

The brazen thieves hit not once, but twice at Roman Stone Construction Co. of Bay Shore, N.Y. Using the cover of darkness to do their dirty deeds, they broke into the precast manufacturer’s plant, cutting all welding cables and cleaning out the company’s valued assets as they made their way through the facility.

“They took anything that was metal and that you can sell,” says Tom Montalbine, president of the 35-employee organization. Nothing was safe from the crooks’ hands – small tools, copper wiring and many other operation-critical items went out Roman Stone’s door that night. But the precaster’s troubles didn’t end there. The initial break-in took place on a Thursday night in mid-March, and the same thieves struck again the following weekend.

This time the thieves – evidently more educated and knowledgeable about their target – spent even more time vandalizing equipment, stealing tools and absconding with raw materials. “They must have spent hours in here ripping out every piece of copper wiring we owned,” Montalbine explains. “They also smashed our batch computer and vandalized our expensive batching equipment.”

The second hit impacted the precaster even harder than the first. In fact, all employees had to be laid off until the damage could be assessed, the insurance adjusters could do their jobs, and the plant could be repaired to the point of being able to make product again. Without much help from local police – who basically just wrote a report but didn’t do any “CSI-like” investigating, according to Montalbine – the precaster was left to his own devices to 1) get back up and running, 2) figure out who the culprits were, and 3) shore up his facility to ensure that the same crime wouldn’t happen again.

Montalbine says it took one day to fix the batch machine but notes that even months later his employees are discovering that items pertinent to the firm’s operations are missing. “Just the other day I was looking for a handsaw that was evidently swiped during the operation,” says Montalbine. “It’s been extremely disruptive to our operations.”

Finding the culprits would prove more challenging for the precast manufacturer, which posted signs offering a reward for any information related to the crime. One thing he believes is that it was an inside job – based on how well the thieves knew the facility, where everything was and where the cameras were located. He’s since hired a private investigator to look into both break-ins.

Montalbine says some of the best advice he’s received came from the owner of an adjacent asphalt plant, who told him “not to discount any information that you receive or any hunch that you might have.” Even a longtime employee, for example, could be a suspect when such crimes occur. “He told me not to overlook even my most trusted worker,” says Montalbine, “knowing that he or she could be the one involved.”

To shore up Roman Stone’s facility and ensure that the same problem doesn’t occur again, Montalbine has installed more interior cameras throughout the plant to augment those that were already installed on the facility’s exterior. He’s also adding more exterior facility and street lighting – particularly around the areas where the break-in occurred. A wiser Montalbine says he’s also educated himself on the fine points of dealing with break-ins and other thefts that can quickly erode a company’s bottom line.

“After learning that about 25 percent of companies have fallen victim to embezzlement – many times unbeknownst to the firms’ owners – I realized that theft, vandalism and internal theft can really happen to anyone,” says Montalbine. “For most of us, it’s not a matter of if it will occur; it’s a matter of when it will happen.”

Assessing the vulnerabilities

Regardless of size, all precast manufacturers are vulnerable to theft fraud and other debilitating threats that can literally take down an entire plant for days, weeks or even months. Whether the crime is embezzlement, robbery, vandalism, inventory theft or computer crime, some of the threats can continue unchecked for years. The employee that siphons diesel out of a work truck on a weekly basis, for example, can wind up costing the company thousands of dollars in lost fuel over the period of a year.

Bob Chartier, vice president of key accounts at security personnel contracting firm AlliedBarton (alliedbarton.com) in Conshohocken, Pa., works often with manufacturers and says one of the best first steps to thwarting crime is educating employees about company policies, procedures, possible “criminal sightings” and other potentially damaging behaviors. By adopting a New York City-like “If you see something, say something” campaign, for example, precasters can keep an ear to the ground and pick up on potential threats before they turn into real problems.

Chartier says precasters should also consider their facilities’ perimeters and how vulnerable these areas are to potential threats. Physical barriers like fences, waterways and walls can be effective deterrents. When added to the mix, surveillance cameras left on 24/7 and security personnel can help beef up the perimeter and make it much less attractive to criminals. Other good options include authorized truck gates installed at points of egress (such as employee and visitor entrances); exterior doors that are secured and never left propped open; and periodic vehicle inspections (to find stolen goods and equipment).

“Don’t make it easy for a contractor to come on site and drive away with a roll of copper wire in his truck,” Chartier warns, noting that in many cases the steps taken to shore up a plant can be based on past experiences, area crime statistics (who’s doing what to whom) and the issues that other precasters have dealt with. “Look at the types of crime and theft that your firm and others in the area have grappled with in the past,” says Chartier, “and begin mapping out your security strategy based on those initial points.”

Keeping an “eye” on things 

In today’s digital age, few would argue the value of 24/7 video surveillance for keeping a precast plant safe from crooks. After all, while it’s impossible for owners and managers to be in all places at once, a camera and recording device can serve as their eyes and ears around the clock.

According to Ian Povey, director of product marketing and management at surveillance solutions provider Avigilon (avigilon.com) in Vancouver, British Columbia, precasters should take a multifaceted approach to video surveillance that includes ongoing recordings both inside and outside of the plant, regular reviews of the images to see what’s going on when no one is watching, and post-incident reviews to see what happened, who it involved and when it took place.

Today’s surveillance systems also allow for easy detection and alerting of boundary crossings or other abnormal behaviors. In some cases, of course, it takes more than a camera to deal with the threats. One rather costly area that companies tend to overlook, for example, are finance- and accounting-related crimes that can take a toll on a precaster’s bottom line. “Assess and pinpoint the threats first,” Povey advises, “and then develop controls that will help you find anomalies within certain business practices, such as financial systems and ordering systems.”

Precasters who take the time to assess their operations, walk through the potential threats, and then shore up their operations in a way that thwarts crime will benefit from reduced downtime, improved employee safety, better productivity and the peace of mind that comes from knowing that the threats are being kept at bay. Of course, keeping out 100% of the threats isn’t always possible. When an incident occurs – and after the proper authorities have been alerted and the necessary insurance and other reports filed – Chartier says precasters should review the situation and any relevant surveillance recordings to help pinpoint the culprit.

The next step will be making sure the problem doesn’t happen again. “Review your procedures and policies to determine where and how the breach occurred,” says Chartier. “During that exercise, if you see something within your firm’s organizational framework that would be vulnerable to future threats, you’ll want to address it to keep it from recurring. In most cases, avoiding similar problems in the future will require a few tweaks to existing policies.”

As Montalbine found out by talking to area business owners about his firm’s repeated theft and vandalism problem, common sense often springs into action when either averting future or dealing with existing criminal activity. In the end, Chartier says the focus should be taking the opportunity away from individuals who have bad intent.

“You can keep reasonably honest people honest by not affording them the opportunity to do something wrong,” remarks Chartier. “You do want to trust and respect your employee pool, and hopefully through your recurring vetting process, that’s the caliber of people you have on board. If not, then it’s time to come up with measures to keep your assets and employees safe.”

Bridget McCrea is a freelance writer who covers manufacturing, industry and technology. She is a winner of the Florida Magazine Association’s Gold Award for best trade-technical feature statewide.

Sidebar: Reducing Business Crime Exposure

Criminal attacks against companies take many shapes and forms. Accountants who pilfer small amounts of cash over long periods, outsiders who break in and steal valuable equipment and materials, and computer hackers who steal private information and shut down servers can all cripple a precaster’s operations and bring the company to its knees.

In its “Guide to Preventing Workplace Fraud,” Chubb Insurance (chubb.com) based in Warren, N.J., advises firms to develop a fraud risk management program that includes loss control measures. This is critical to the detection, mitigation and prevention of fraud-related risks. Loss control measures need to take into account the company’s industry, corporate structure and organization, geographic locations, customer base, vendor relationships and regulatory environment.

Chubb Insurance says an effective risk management program may include the following types of internal controls:

1. Employee background screening, especially for employment applicants for positions involving trust, such as handling cash, inventory, and financial statements and records. Screening of potential employees should involve checks of criminal history, credit reports, verification of employment and education, and drug testing. An employee screening program should be commensurate with the company’s fraud risk and take into account applicable legal considerations.
2. Customer feedback, reports and complaints. Companies often pay little attention to feedback from their customers, vendors and other external sources. Yet ignoring this feedback can result in a failure to detect and respond to possible fraudulent activity.
3. Effective oversight. Monitor, review and supervise financial-related activities on a regular basis at multiple levels, including account reconciliations, exception reports, trend analysis, budget and/or plan variance analysis, and audits.
4. Mandatory vacation policies. Require employees who hold financial positions to take regularly scheduled vacations, and do not allow them to conduct company business while on vacation.
5. Fraud reporting, awareness and deterrence programs. Generate a program that will facilitate the reporting of suspected fraud by employees and others. Include training employees, and even vendors, in the fraud risks that threaten your business. This training should focus on identifying warning signs (“red flags”) of potential fraud. Create a “perception of detection.” A reputation for aggressively investigating indications of fraud can have a strong deterrent effect. On the other hand, a reputation for ignoring possible fraud may prove to be an invitation for perpetrators.
6. Effective follow-up and/or investigation. Establishing written policies and procedures, and assigning responsibility for implementing them – for follow-up and/or investigation when “red flags” are noted, policy and procedure violations occur, and allegations of improprieties surface – is critical to ensuring that investigation and remediation occurs.
7. “Zero-tolerance” fraud policy. One fraud deterrence strategy is to announce, communicate and enforce a “zero-tolerance” fraud policy, meaning that even the most minor fraudulent activity will be reviewed and prosecuted according to company policies.
8. Cooperation with prosecution efforts. In the event of fraud, execute all required affidavits of forgery, provide requested documentation, make company staff available as witnesses, etc. It is important that a company consistently demonstrate its commitment to a zero-tolerance policy with support for prosecution of any person found to have been engaged in fraudulent activity.
9. Internal audit/internal investigative units. Internal audit and/or internal investigative units are mechanisms for companies to monitor and look for violations of corporate policy and breakdowns in internal control. Companies should evaluate whether to establish these units separately or to combine them.