FRAUD IN HOTELS

The surest and fastest way to human clinical death is by bleeding, and the most clinical way to corporate bankruptcy is through fraud. Because of the peculiarities of the hotel industry in terms of regular and massive cash flow; the attraction to steal, to misappropriate fund, to embezzle cash and to indulge in theft of inventory is quite high. Daily cash payments are made for room bookings and restaurant sales and if care is not taken a great part of this money may find its way into staff pockets. Similarly, the supply department is prone to financial error of commission and omission. The bottom line is that the tendency to endanger turnover and hurt cash-flow is real in the hospitality industry and concerted efforts must be made towards its deterrence. While it may be impossible to rule it out-rightly, there must be deliberate anti-fraud policy towards its significant reduction.

The fight against potential fraud starts from policy making and ends with religious implementation of penalties to defaulters. There certainly will not be any need for rules and regulations if there are not going to be recommended punishment for those found guilty. Again, it will be foolhardy to believe an average staff will not be tempted at the daily exposure to cash. To guard against this seeming possibility, management should make provision for cash handling allowance and at the same time enforce serious measures against likely exposures.

To assist anti-fraud policy is often the pre-employment security background check. While I do not have anything against this, I still think, at its best is simply an academic exercise. The reason is that nobody is going to hire a staff that has questionable security background anyway. So, the issue really is what happens after the staff is employed. And at this point, it is often too late as further cost is likely to be incurred in the course of theft investigation. My point is that beyond security background check, referrals and guarantors must be secured towards a possible potential financial crime in the hotel. This will mitigate the serious risks the financial capacity of the hotel will be exposed to.

Drafting anti-fraud policies for hotel is easier said than done; a risk assessment must first be done to verify the areas of possible exposures and the results used in formulating feasible controls. Needless to say that this of course would differ from hotel to hotel. This piece may not be able to deal decisively with the provisions that should be contained therein. The overall perspective is to let employees know the position of management on fraud and at discovery, termination is imminent. Yes. And penalty for non disclosure of possible theft should be same. The management’s ‘zero tolerance’ for fraud must not be an outward reflection of the country’s permissiveness for corruption.