Case: The Scenario Julie Smith trembled uncontrollably as the judge ordered her to stand up for sentencing. It was really happening. She would be sent to prison. All this time, no matter how many warnings she got from her lawyer, a part of her had never really believed that it would come to this. "A two years of probation," thundered the judge, "and you will pay full restitution." Julie fell back into her chair and began to cry. She had not even told anyone in her family what was happening because she was so embarrassed and humiliated. How had she ended up here? In mid-2007, Julie started working as an accounts payable clerk for a large insurance company. Her job consisted primarily of processing invoices but as a member of the wider finance department she had many opportunities to observe and learn the company's audit procedures. Julie viewed the work in accounts payable as repetitive and tedious, and she was aware that she did not have the discretion or authority to make her own decisions. Everything at this company was done VERY strictly by the book. Despite these limitations, however, Julie enjoyed her job and the company of her co-workers and colleagues, and she felt that her employer treated her well. In early 2008, Julie made a lateral move to the department that administered corporate commercial accounts. Large corporations bought insurance policies as protection from lawsuits and were required to pay a flat rate per term regardless of the number of claims made against them. Julie oversaw more than 500 corporate policies. When one of the corporate clients experienced a loss, Julie would process the claims for legal fees, compensation, and related incidentals. Examples of common losses included compensation paid out due to slips and falls, safety violations, and other lawsuits. Julie processed an average of 13 to 15 claims per week. When the compensation was less than $10 000, Julie simply created, signed, and issued the cheque herself. Claims over $10 000 required a second signature, but she could ask anybody in the office to sign, so this was rarely a problem. After several months on the job, Julie noticed that the corporate clients did not receive reports about claims made against their accounts. Since corporate clients paid a flat fee regardless of how many cases were processed, the corporate clients had little incentive to actively monitor claims activities. Although she enjoyed her job and her co-workers, Julie, a single mother with a toddler, struggled to make ends meet. She earned $24 000 per year. Her expenses had exceeded her income ever since her son was born. Daycare was so expensive, but she had no choice but to use it if she was planning to work full time. Worse, the small savings account that she inherited upon her mother's death a few years ago was nearly empty. She had only a high school education, and she had been very lucky to land the job at the insurance company in the first place. Her options for increasing her income were limited, and her son's father had never been involved in parenting or provided any type of financial support. In fact, Julie doubted she would be able to locate him, even if she tried. As she worried and considered her limited alternatives, Julie thought about her work tasks again, remembered that her company's internal audit process examined corporate commercial accounts only every six years, and came up with an idea for some relief. Julie's son was enrolled in a private, at-home, daycare service. She was friends with Marie, the person who operated the home daycare, and they had shared a lot of laughs together. Julie usually paid for daycare on a bi-weekly basis using a personal cheque. Until the day she didn't. Three weeks after her initial flash of "inspiration," a different kind of cheque was handed over to Marie, one with the insurance company's name featured as payer instead of Julie's name. "That's weird," commented Marie, "what is up with this?" "Oh, I was embarrassed to tell you," said Julie, looking down at her feet. "I'm having some financial difficulties and my employer has decided to help me out, so the cheques for daycare will come from the company from now on." Although this sounded a little strange to Marie, she figured that the issue was personal, shrugged, and accepted Julie's cheque. Julie left the daycare feeling euphoric. Her idea had actually worked! Three weeks previously, she had created a "loss" in the system with Marie's name ascribed to it. Julie selected one of the very large corporate commercial accounts against which to submit the claim, a company that was seldom, if ever, reviewed. She was well aware of the most common types of losses experienced, and so it was not difficult to come up with a scenario and dollar value that would not attract attention. She simply entered Marie's name as the claimant, approved the claim, and in due course a cheque was issued. The plan had worked so well the first time that Julie executed it again. And again. And again. A little over eight months passed and, in that time, she created eight different claims under Marie's name. She added it up one day and realized that she had netted $12 000 from her "side activities." Julie reflected on how easy it had all been. She worried that she would be tempted to do it over and over again, and not just for daycare expenses. This was not the person she wanted to be. She decided that the only solution was to remove herself from temptation. She asked for, and received, a transfer to another department. While Julie was celebrating her transfer and the fact that she would no longer be tempted, a problem emerged. The cheque for the last claim she had invented came back to her, because she had not filled in a field that coded the claim for the accounting system. Normally she could have fixed the oversight in a few seconds, but because she had been transferred, she no longer had access to the system. The person who replaced Julie asked her for a copy of the paperwork to back up the claim before filling in the missing information. Julie was unable to provide any. Not long after this incident, Julie arrived at work one morning to find herself called into a private room. Management informed her that they knew about the fraudulent claims, fired her, and advised her to get a lawyer. One month later, a police officer came to her home, and she was formally charged with fraud over $5000. Now here she was, in court, being sentenced. All she had ever wanted was to be able to look after her son properly. How had it come to this? Discussion Questions 1. What does this case teach us about ethical decision-making behaviours? 2. Did the workplace environment or corporate culture contribute to Julie's ability to rationalize her fraudulent activities? Did these factors contribute to her decision to stop committing fraud? Explain how organizational factors may have contributed to her activities and subsequent decisions. 3. What can employers do to create an environment that encourages ethical behaviour