13 May 2000
People wanting to be executives are using companies on the Internet to forge university degrees and create fake identities, a new company that pre-screens senior staff has found.
Personnel Risk Management has identified a number of websites that can create replicas of university degrees, licences and birth certificates, under the guise of ``novelty items".
An offshoot of a large British-based security company, PRM concentrates on recruitment at the upper corporate level. It says demand for investigations of senior staff in Australia has rocketed following increasing shareholder pressure and the proliferation of companies and individuals undertaking contract work.
Since last November, PRM has been quietly performing up to 50 intensive background checks a month. Its emergence follows the release of a report by accountants KPMG that found fraud within Australian companies could be costing the corporate sector up to $16 billion a year.
KPMG found almost half of Australia's top 650 companies admitted to being victims of fraud last year at an average cost to each company of $1.3million, or $350million overall. The report found most companies had done little to prevent it.
A director of PRM and a former Victoria Police inspector, Geoff Stockton, said most fraud could be prevented if companies carried out more comprehensive pre-employment screening. ``Many companies are now choosing to do that because they have fallen victim to fraud by employees that they did not check properly," he said. ``Hundreds of thousands of dollars could be saved if these companies had effective screening processes in place so that dishonest individuals are not employed in the first place."
Mr Stockton pointed to the former head of the National Safety Council, Mr John Friedrich, who committed suicide in 1991 after it was discovered the NSC had falsely secured millions of dollars in loans. Mr Friedrich had created an elaborate false identity.
Mr Stockton said such high-profile cases were rare because companies preferred to keep fraud out of the public eye. But he said as many as 25 per cent of job applicants' CVs contained false information.
Mr Stockton cited the case of one would-be executive who claimed to have degrees from universities in England and Australia, and said he was a former BHP director and a former board member of the St Kilda Football Club. ``None of the claims in his CV were true," he said.
What was more disturbing, Mr Stockton said, was the ease with which people could create false identities that were backed up with documentary evidence. He said the Internet had opened up new possibilities with sites that can order ``very convincing fake university degrees for just a few dollars".
Mr Stockton said it was a simple process to fictionalise or embellish qualifications, overstate responsibilities and salary levels and ``fudge dates to hide a career gap or even a prison sentence".
``There are also instances of people creating entirely false identities to conceal bad credit histories, criminal convictions or to disguise the fact that they are not entitled to work in the country."
A director of H and S Support Services, Mr Greg Hooper, whose company checks up to 100 top and middle managers a year in Australia, said he was also increasingly being called to do background checks on Australian candidates for jobs in America and Europe.
``We are also paid to investigate companies which are the subject of takeover bids and asked to check on directors of companies which are involved in merger deals or joint ventures," he said
Mr Hooper said corporate pre-screening was on the increase because Australian shareholders were expecting better performances from company managers: ``It's becoming a big market. You only have to look at the salaries that are being offered. Companies can't afford to to rush in."
Mr Hooper said he had exposed a woman working in a Victorian Government department who had lied about her qualifications. The women resigned after being confronted with the allegations.
His company had also uncovered the chequered career of a Melbourne share trader who was allowed to resign from two broking firms for fraud without being charged or dismissed.
``He ended up at another company and cost them millions because no one knew what he'd been up to, until we came along," Mr Hooper said.
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