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Asset misappropriation by employees and the need for protection

Asset misappropriation of electronic data and propriety information by employees is on the rise and businesses have to protect themselves, says Jim Downs, founding partner and managing director of MKD International Inc. 

“Companies must have appropriate checks and balances in place to ensure there are regular audits done to protect all assets, including digital information,” he tells AdvocateDaily.com.

“Increasingly in this digital age, employees use computers to steal cash, data and to sell information to a competitor. Twenty years ago, this type of misappropriation might have involved stealing paper files.” 

Companies have to ensure their systems are secure, Downs says. 

“The management of these risks depends on the business and number of employees,” he says. “The larger the business enterprise and the more people a company employs, the more checks and balances a company needs to have in place to protect itself.” 

While misappropriation can include theft or fraud involving cash, inventory or other property belonging to the company, increasingly it focuses on proprietary information such as client lists, trade secrets and other businesses information, Downs says.

“It can be an employee who has been enticed by another company to steal proprietary information to advance that business,” he says. 

MKD is hired by large corporations, small businesses and Crown corporations to investigate when there is a suspicion of asset misappropriation. Sometimes police become involved and the employee (s) is charged criminally but an investigation can also result in a civil matter being launched against the person responsible, Downs says. 

“It’s about gathering evidence to prove misappropriation occurred,” he says. “The misappropriation of data can be traced back to an individual through computer and accounting forensics, surveillance and other investigative tools.”

A growing number of companies are also retaining MKD to conduct electronic countermeasure “sweeps” to detect covert devices that have been installed to steal data, Downs says. 

“This can help detect whether a company’s proprietary information is being stolen,” he says. “Companies are becoming more diligent about this as they are becoming aware of the potential risk that an individual in the organization will steal for personal gain.

“Particularly if the business has a patent for a product, they don’t want their competitor to obtain that information to undercut their sales.”

Downs, who adds it’s a criminal offence to intercept private communications, says MKD will conduct these “sweeps” or searches for electronic countermeasures, which can include illegal interceptions of voice communications, video surveillance and computer data.

“Companies want to ensure their communications are secure,” he says.

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