Employee Theft: Management Liability Insurance Cover

At work, I received a booklet and paperwork from the insurance company about half an inch thick, pimping their 'Management Liability Insurance Cover' scheme. First thought that popped into my mind was, 'What IS that? Do we have to insure?'

Basically 'Management Liability Insurance Cover'(MLIC) is insurance for employee crime/theft, occupational health and safety liabilities, employment practice liabilities accruing from business operations and liabilities accruing from the actions of directors and officers.

One of our clients at work had a staff member steal several thousands of dollars from the company. Email records were pulled out from the archives and embarrasingly personal emails that were sandwiched between the corrupt dealings were paraded around the court. The person in question was using her work email account to setup liaisons and steamy dates with her boyfriend and all these were supplied to the court as evidence along with all her other unsavoury emails.

The insurance brochure provided a few case studies but in terms of relevance to this PF blog, here's the financial case study of one of the claims they provided as a lure to convince companies to buy MLIC insurance.

"Employee theft is the most common type of crime claim, specifically theft by a staff member in a position of trust, through the manipulation of accounting systems. Over a period of nine months, an employee of the Insured misappropriated $80,000 of client's money by pocketing cash from sales which was to be banked into the Insured's trust account. The employee had a gambling problem and admitted to stealing the funds. The employee is being prosecuted by the police but is unable to pay the stolen funds back their employer as the funds were gambled away."

I can't even begin to grasp the craziness of that employee for stealing $80,000 to gamble and lose. The list of negatives resulting from that action is astounding:

* Criminal record in police database
* Being unemployable for the rest of their poor miserable life (no work=no money=no life=miserable)
* Gambling habit/problem will probably result in them pawning off the rest of whatever possession they haven't yet already pawned
* All those years of study and work history down the drain because no employer will hire them in that position nor industry ever again
* Being cast out from their professional association or disbarred depending on your industry and qualifications
* Being banned from travelling in countries which frown on criminal convictions

One of my colleague at work says, "If someone is going to steal, they should be smart enough to realise that you need to steal enough to beable to retire for the rest of your life in a foreign country where you can obtain a new identity."

In the Leonardo DiCaprio movie, Catch Me If You Can where he plays Frank Abagnale Jr, the moral of the story is that you can be talented at theft and fraud, thinking that you can get away with it, but in the end - you will be caught.