As if finding out that your employees are surfing and storing pornography on their work computers isn’t bad enough, a new hypothesis posits that these people are more likely than others to be stealing from you as well. Workplace fraud and deviant behavior, it seems, go hand in hand. At least that’s what fraud investigator Ryan Hubbs thinks.

Hubbs, global anticorruption and fraud manager for Schlumberger in Houston, discussed this correlation with other fraud professionals, who convinced him to do some more research and write about it.

“Over the past several years of conducting investigations, it almost seemed that regardless of the allegation or complaint, we’d find pornography or other workplace deviant behaviors. It happened so much that I jokingly coined the phrase that all investigations lead to porn, because it truly felt this way,” he says. “In a contract fraud case we would also identify porn. In a conflict of interest case we would identify an inter-office affair or abuse of the email system mostly involving porn.”

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A New Tool for Finding Fraud

Fraud can remain hidden for months or years if the control environment is weak or the fraudster is adept at covering his or her tracks and the tools for the fraud examiner haven’t changed much.

“We have the traditional red flags; we look for financial anomalies through the use of software, or we use investigative or interviewing techniques to find fraud. Even with all of these tools, we still are mostly reactive in our responses to fraud,” says Hubbs.

With more than 40 per cent of fraud uncovered through anonymous tips and another eight per cent by accident, according to the latest findings by the ACFE, it’s clear that more proactive methods of detecting fraud need to be developed. Hubbs sees his deviant behavior hypothesis as one such method.

“If an employee is willing to engage in a workplace deviant behavior and violate certain workplace rules and policies, then it is possible that they may also be more likely to engage in fraud,” he says. If his theory holds true, fraud examiners could start looking for deviant behaviors and then work backwards to find out whether fraud is occurring.

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Suspect Behavior

So what should investigators be looking for?

“When I was conducting my article research, I tried to look for those deviant behaviors that would violate traditional workplace rules, policies and procedures and disrupt the working environment,” says Hubbs. The behaviors included sexual harassment, inter-office affairs, viewing or transmitting pornography, bullying, harassment, intimidation, lying and retaliation.

Results of Hubbs’ research indicate a correlation between certain deviant behavior in the workplace and certain types of fraud. The power deviant behaviors (bullying, harassment, intimidation and retaliation) appear to be aligned with the corruption, kickback and extortion frauds, he says. “This would make sense, since most of these types of fraud are associated with people in power, and they may be more likely to display the power deviant behaviors.”