“Fake Chairman” frauds follow roughly the same scenario: the author of the fraud impersonates the Chairman or another senior employee or director of the company (for example by appearing to use their e-mail address), and asks an employee (usually working in the finance or accounting department) to make a confidential and urgent wire transfer to a specified bank account, instructing them not to discuss this with anyone (even the instructing Chairman/senior employee), under various pretexts (e.g. a confidential acquisition; a confidential deposit; or to change the bank details of an account to which the company is due to make a payment). The money is of course sent to the fraudster’s account, generally located offshore.
“Fake Chairman” frauds have become an increasing issue over the past months in France, with a recent example in November 2014 being an international tyre manufacturer defrauded of 1.6 million euros.
Originally, fraudulent messages were relatively easily to detect (e.g. containing numerous spelling mistakes; attached incorrect company logos; employees using unusual accents etc.). However, Fake Chairman frauds are becoming increasingly sophisticated, and therefore increasingly risky.
This explains why, despite press coverage, companies continue to face serious threats from such fraudsters, and may find themselves victims of such criminal acts.
- Alert employees (in the accounting/ finance departments in particular) to the risk of such a fraud through a clear e-mail communication, or other notification, to be sure they are warned of the risks (and that the employer can show they have been warned).
- Make it clear that senior officers will not ask employees to make confidential bank transfers by e-mail informing them not to discuss this with anyone, including the instructing party.
- In the event that employees have negligently made such transfer, employers should ensure that the employee is convened to a pre-dismissal meeting no later than 2 months after the employer becomes aware of the fraud (after such time, the employer can no longer take disciplinary action against the employee).