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(Troy, NY) The big three automakers recently begged Congress for $34 billion in bailout funds. This was their second request. The CEOs of Ford, Chrysler and GM first flew to Washington on corporate jets. The skeptic representatives in Congress hinted that although it is a symbolic gesture, cutting their own salaries and refusing bonuses would be an important one. When the executives returned to D.C. for a second hearing, they drove hybrid cars and promised to take $1 salaries for as long as their companies where using federal funds.
There is little doubt that the lawmakers’ skepticism and negative tone toward the executives and the original decision to delay a vote on the bailout was influenced by the actions of AIG executives after the insurance giant received $85 billion in emergency funds.
During an AIG Congressional Hearing, Rep. Elijah Cummings discussed a costly AIG executive retreat that occurred shortly after the government bailout. The costs, he said, totaled $443,343.7:
“Have you heard of anything more outrageous-a week after taxpayers commit $85 billion dollars to rescue AIG, the company’s leading insurance executives spend hundreds of thousands of dollars at one of the most exclusive resorts in the nation…Let me describe for some of you the charges that the shareholders, taxpayers, had to pay. AIG spent $200,000 dollars for hotel rooms. Almost $150,000 for catered banquets. AIG spent $23,000 at the hotel spa and another $1400 at the salon. They were getting manicures, facials, pedicures and massages while the American people were footing the bill. And they spent another $10,000 dollars for I don’t know what this is, leisure dining. Bars?”
House Oversight Committee chairman Henry Waxman, D-Calif., added during his opening statement:
“Average Americans are suffering economically. They’re losing their jobs, their homes and their health insurance, yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.”
FOXnews.com further described the panel’s disdain for AIG executives’ actions that led to their financial trouble in the first place: “The hearing disclosed that AIG executives hid the full range of its risky financial products from auditors as losses mounted, according to documents released Tues. by a Congressional panel examining the chain of events that forced the government to bail them out. The panel sharply criticized AIG’s former top executives who blamed each other for the company’s financial woes. ‘You have cost my constituents and the taxpayers of this country $85 billion and run into the ground one of the most respected insurance companies in the history of our country,’ said Rep. Carolyn Maloney, D-N.Y. ‘You were just gambling billions, possibly trillions of dollars.’” (http://www.foxnews.com/
Many of AIG’s problems could be tied to the mortgage crisis because of its insurance of mortgage-backed securities. The mortgage crisis itself has countless examples of fraud. In San Jose, CA, two brokers were convicted of 62 combined felony counts and face up to a combined 60 years in prison for mortgage fraud involving $10 million in sub-prime lending (cbs5.com) Along with AIG, mortgage giants Freddie Mac and Fannie Mae are under investigation by the FBI for potential fraud. The FBI is investigating up to 24 large financial firms and how they possibly misrepresented their assets. In 2004, two senior level executives with AIG were charged with security fraud. But it took the financial crisis and housing bubble burst so see that the dishonesty and greed may have been deeper and more widespread than anyone imagined.
With the approved $700 billion federal bailout, lawmakers and Americans are pleading for accountability of CEOs' actions and compensation. But if senior-level executives can be tempted by greed, what about average employees? The executives may be held accountable and made examples of, but they rarely act alone. They may be in a better position to abuse their power but the average employee typically has plenty of opportunity to commit fraud or theft as well.
Background screening can be a tool to help judge the quality and character of job candidates before they join your organization. Looking carefully at past criminal behavior, including Federal Criminal inquiries can be vital before hiring a candidate for any position where they have access to critical information or company assets. Inquiries such as Motor Vehicle Reports and Credit Reports can help employers further evaluate the character of job candidates. According to the CRISP Report Strategies to Detect and Prevent Workplace Dishonesty: “Asset protection studies indicate the same thing year in and year out: employees account for much, if not most, of a company’s losses. Research has shown as many as 75% of all employees have stolen or otherwise harmed their employer.” Coffin (2003) reports that employee dishonesty is the fastest growing organizational problem for many companies. Employees have the best access to all company assets. They know where cash is stored. They often need or are able to acquire keys, passwords, alarm codes, and safe combinations (Hayes, 2007). Some company associates, aware of security procedures and systems, believe they are able to accurately weight their risk of being caught if they steal. More significantly, employees assess the attentiveness of other workers. They know when alert, caring managers and colleagues are present as well as when naїve or apathetic associates are in charge. A recent survey by Hollinger and Adams (2007) reports that retailers believe employees account for 47% of their inventory losses. Employees steal in a variety of ways, but the results are always the same: lost profits, low morale, and even the demise of an entire business. Regardless of casual factors or excuses, all types of workplace theft and fraud are wrong and harm organizations, other employees, customers, and reputation. For small businesses, it can be even easier for employees to deceive and commit fraud. It is usually more difficult for a small business to recover from an act of employee fraud.
Congress has asked automakers to represent a viable restructuring and business plan before they proceed with a bailout. Many feel that the proposed $25 billion bailout will not make the U.S. automakers more competitive or efficient and that they will only ask for more funding down the road. In this tough economic environment, it is more important than ever to make sure that your organization is competitive and efficient.
One way to improve productivity and your bottom line is to improve the quality of your workforce and mitigate the risk through pre-employment background screening. A good background screening policy can help assure that you hire the best candidates for your company. To implement a background investigations policy, or to discuss your current screening process, contact a CI representative today.
Commercial Investigations LLC assists employers with protecting their employees, customers and overall businesses through their Background Investigations and Consulting Services. For more information visit their website at www.commercialinvestigationsllc.com or call them at 518-271-7546.
COMMERCIAL INVESTIGATIONS LLC (CI), a full service licensed private investigative agency, offers thorough and affordable employment BACKGROUND INVESTIGATIONS. CI provides accurate, timely, cost effective and fully compliant reports supported by high standards of customer service. CI also offers consulting services to assist organizations with reviewing and auditing their BACKGROUND INVESTIGATIONS processes for compliance, effectiveness and efficiency. CI provides the PROACTIVE TRUTHTM regarding applicants, thereby reducing turnover and limiting exposure to civil liability.
