Case study · Investigations
Fourteen Years on Both Sides
For fourteen years, the man who approved a manufacturer's transporters was also its transporter.
- Undisclosed conflict of interest
- Proxy, front & related-party vendors
- Vendor favouritism & share skew
- Abuse of authority & control override
- conflict running undetected
- 14 yrsconflict running undetected
- company vendors who were also the firm's customers
- 5company vendors who were also the firm's customers
- average balance held in the firm's account
- ₹30–50 lakhaverage balance held in the firm's account
- trucks owned; fleet expansion under way
- 3trucks owned; fleet expansion under way
01The situation
He wrote the purchase orders, approved them, and then delivered against them.
A long-serving stores manager was trusted with dispatch, signatory and petty-cash responsibilities. Management had a vague concern about stock being sold as substandard. Device review pointed somewhere else.
How it came to us
Identified while reviewing a long-serving stores manager named in management's initial concerns.
02How it worked
- 01The employee ran a transport proprietorship in his own trade name and introduced it as a company vendor.
- 02With help from colleagues, logistics work was routed to his firm without competitive evaluation.
- 03Existing transporters appear to have been moved beneath his firm as sub-contractors.
- 04He prepared purchase orders and vendor documents on company systems and effectively submitted them to himself. Invoices were raised against verbal orders.
- 05He was a joint signatory on vendor cheques and kept his firm's petty-cash records in the same file as the company's.
Swipe sideways to see the whole diagram.
- Insiders involved
- Channels & documents
- The organisation
- Outside parties
- Where the money ended up
- Repeats / feeds back
How it was hidden
Long tenure and trust, a proprietorship invisible in company records, colleagues in the approval loop and small digital payments through the firm's account.
03The challenge
Prove that the employee controlled a vendor firm, show how work reached it, and establish who else in the chain helped.
What made it hard
- Conduct spanning 14 years
- Partial bank data
- Company ledgers unavailable for quantification
Red flags that were there to see
- Vendor address matching the company office
- Employee as joint signatory on vendor payments
- Invoices against verbal purchase orders
- Stores staff with access to editable order templates
04Our approach
- Workstream 01
Digital forensics
Reviewed the employee's company device and mailbox.
- Workstream 02
Relationship mapping
Mapped the firm's business relationships.
- Workstream 03
Financial review
Analysed the firm's and the employee's bank records.
- Workstream 04
Asset searches
Property, vehicle and fleet checks.
The breakthrough
Device evidence showed the employee preparing his own firm's purchase orders and invoices on company systems, which placed him on both sides of the transaction.
05What we found & did
- Undisclosed parallel business acting as a company vendor.
- Logistics work routed to the firm with other department heads involved.
- Misuse of company order templates and verbal-order invoicing.
- He also acted as a signatory on payments to his own firm.
- Year 0Transport firm formed
- Year 6Introduced as a company vendor
- Years 6–20Work routed; sub-contracting of incumbents
- Year 20Fleet expansion under way; identified
06The impact
Management gained clear evidence of a long-running conflict of interest and the colleagues who enabled it, with recommended controls to keep requisitioners away from vendor creation and payment.
- conflict running undetected
- 14 yrsconflict running undetected
- company vendors who were also the firm's customers
- 5company vendors who were also the firm's customers
- average balance held in the firm's account
- ₹30–50 lakhaverage balance held in the firm's account
- trucks owned; fleet expansion under way
- 3trucks owned; fleet expansion under way
07Lessons for your business
The controls that would have stopped this, or caught it sooner:
- Match vendor master addresses, phones and bank details against employees every year.
- Stores and requisitioning staff must not hold signatory or order-creation rights.
- Ban verbal-order invoicing and lock document templates.
- Benchmark logistics rates to spot sub-contracting mark-ups.
~₹5 Crundue benefit quantified
The CEO's Three Vendors
A subsidiary CEO routed a rural retail rollout through vendors fronted by his own associates. The money trail led back to him.
- Procurement reconstruction
- Corporate and statutory records
- Ground intelligence
- Funds-flow tracing
US$4.7M+diversion traced to the founder
Zero Skin in the Game
An investor funded a road-construction contractor. Within months, the founder's own contribution had quietly gone to zero and the diversion had begun.
- Records digitisation
- Funds-flow reconstruction
- Personal wealth analysis
- Corporate and property records
~1Memails and documents reviewed
The Fortune That Wasn't There
Shareholders suspected their managing director of hiding a fortune. On the data available, the money trail did not support that suspicion, and it surfaced employee frauds instead.
- Digital forensics
- Source and application of funds
- Related-party mapping
- Market intelligence
Client names and identifying details are withheld to protect confidentiality. Specific references and client experiences can be shared on request, with the client’s consent.
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