A busy electronic shop on Kimathi Street, Nairobi, is renowned for selling genuine electronics having been in existence for decades.
Ms Isabella Mwashigadi was convinced by a friend that the shop sells genuine products and was encouraged to buy an external hard disk from the shop. She was slightly shocked by the high price but because it was of good quality, she decided to put in just a little bargain.
“I was told a lower price would only be possible if I waited outside the shop and the gadget would be delivered to me without receipt. I called my friend to seek his advice and he told me to cooperate because that is normal. I found it a bit too risky and left,” Ms Mwashighadi told Money.
Surveys show that many businesses suffer immensely from employee theft. In fact the vice has been cited as one of the main reasons many start-ups fail to make it beyond the second year.
According to the 2012/2013 Economic Survey on the Global Retail Theft Barometer (GRTB), organised retail crime is a major concern with the Sh200 billion retail trade market in Kenya said to be losing an estimated Sh3 billion annually.
The Statistics from GRTB reveal that global shrinkage owing to customer theft, employee theft and general stock losses due to internal system errors in 2011 alone, exceeded $119 billion.
Audit, tax and advisory firm KPMG says the reality of employee fraud in today’s businesses informed its latest product in the market to allow for safe whistleblowing.
The Ethics Hotline Service provides a company with a whistleblower hotline and an online platform where employees can raise the alarm without revealing identity.
KPMG then passes the information to the relevant business channels who can then exercise caution as it investigates potential loss in revenues from employee-related theft.
The vice has grown from small-time theft from shelves of pocket size items into a complicated web of perpetrators who have mastered the art of dodging many established control mechanisms. Now thieves target high-value products such as electronics, furniture, baby food products, cosmetics and general food items.
According to the retail sector’s lobby group, the Retail Trade Association of Kenya (Retrak), theft is a major problem facing retailers and it is at times perceived as a “victimless crime,” thus attracting lenient penalties.
Supermarkets are the worst hit due to what Retrak attributes to their expansive physical distribution in the country.
Retailers are losing not only from the shelves, but also from the back office stock system and the front office, or at the till where employees collude to steal.
A survey released by KPMG puts the country’s false claims prevalence higher than her East African neighbours.
In June 2015, retail chain Tuskys Supermarket suspended 91 employees at its Tom Mboya Street store in Nairobi on suspicion of internal theft.
The employees are accused of working with an external cartel that was allegedly clearing goods from the store and later selling them to retail shops in Nairobi and its environs.
Even CCTV cameras do nothing to address the problem as employees are adept at circumventing technology. Yet the same employees hold the key to rooting out the menace.
KPMG says over 40 per cent of all fraud cases within an organisation are detected with tip-off from employees accounting for nearly half of all information that leads to the discovery of fraud.
The firm’s chief executive Josphat Mwaura said organisations with effective hotlines are more likely to catch fraud by a tip-off because employees have a channel to report misconducts which are inconsistent with their organisations’ values or the laws of the land.
However for employees to help the company in battling theft, there ought to be a proper mechanism that protects them from being victimised. “What really matters is how you let your employees alert you without the fear of victimisation and how you will carry out an independent verification to eliminate any attempts of set-ups and wrong information.” he said.
Experts also advise that businesses address the situation through cultivating a culture that allows employees and other stakeholders to report corruption, misconduct and fraud with their identities kept confidential unless they choose otherwise.
An Ethics Hotline is a simple, yet highly effective management tool designed to enable concerned employees in an organisation to report fraudulent, corrupt and unethical practices.