Thursday, January 8, 2015

SCOURAGE OF CHURCH EMBEZZLEMENT


I hope that the courts send a potent message that any individual who defrauds a not-for-profit organization, particularly a church, to pocket funds for personal use will face jail time on top of being exposed and prosecuted.

Reports coming out of the sentencing hearing for the former book keeper/parish secretary  at St. Patrick's R.C. Parish at provincial court is a flagrant example of greed. The lady defrauded the parish of  some $300,000 over the period from Jan. 1, 2007, to July 31, 2012.

Back in 2011, the former business manager of the Roman Catholic Episcopal Corporation of St. John's was  jailed for defrauding the church of more than half a million dollars. He had served in the role for 38 years!

A rector at St. John Evangelist Church in Topsail — and his wife were convicted of defrauding that parish out of money last year. Apparently they used the money to pay for their two sons' tuition at  a private school in St. John's.

These are challenging times for churches. The costs of upkeep, insurance and the provision of services to those in need continue to rise but revenue from the collection plate is diminishing. This type of theft can not only wipe out profits, but  put parishes it in jeopardy of survival. 

 The damage, while significant, is not only financial. Institutional reputation, parishioner relations,  future growth and negatively affected by a major defalcation.

Why is  fraud a pervasive problems with not-for-profits? There have been reports of thefts from many denominations. What compels people placed in positions of trust to lose their integrity and moral values?

Apparently the answer can be found in what is called the “fraud triangle”. First, there must be the motive or pressure to commit the fraud. This element is usually in the form of a real or perceived financial need, but it can also take other forms, such as the desire to get even with authorities or organisations and even the employer. 

Second, researchers say perceived opportunity to be able to commit the fraud and get away with it must be present. Here, weak or missing internal controls often are enabling factors. There can also be abnormal circumstances beyond someone’s control, like financial pressures from family members. 

The third element is rationalisation, or the ability of perpetrators to find a morally acceptable excuse that justifies why their actions aren’t a crime. 

 Archbishop Martin Currie was very diplomatic in his comments saying last Fall that "Our hearts are with other not-for-profit agencies and charitable organizations which have experienced similar trauma .....It is our hope that by bringing this matter out into the light, we can help others to deal with such abuses of public trust.”

 While employee theft at  religious institutions is all too common these days, prudent steps, such as those outlined above, can help minimize and mitigate the risk. It is a shame that phenomenon is the result of abused well intentioned trust. 

I guess there is always going to be wayward birds in every flock.







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