Publications
Cargo
Theft: The Number One Victimless Crime
Harold Frank - CFE,ABFE
Worldwide
industry theft losses for 1995 were approximately $470 billion, with an
additional $400 billion lost to a multitude of cunning and deceptive fraud
schemes
Throughout
the world a new crime is being featured on your favorite television and
radio stations and in your daily newspapers-the victimless crime. This
crime is not new, but recently has been getting substantial media attention.
For years, private companies have suffered major losses but were quiet
about the details, especially if a government agency was involved in the
investigation. Corporations were satisfied by doing very little, since
they knew their insurance companies would cover them.
But things
have changed. Insurance premiums are increasing, deductibles are getting
out of hand and insurance companies are setting new company standards
of insurability. The era of the "victimless crime" is coming
to an end.
The loss
of this nation's cargo to organized gangs has gotten so far out of hand
that the cost of insurance settlements has grown to what would be considered
epidemic proportions. Just because you are a large multinational company,
had a major shipment stolen but are completely covered by insurance, does
this mean your theft is a victimless crime?
Worldwide
industry theft losses for 1995 were approximately $470 billion, with an
additional $400 billion lost to a multitude of cunning and deceptive fraud
schemes. Do you think your insurance providers or your favorite company
is absorbing these losses? In the purchase price of every computer, $150
constitutes a payback for loss. Insurance providers hike their premiums
to compensate for their losses. Each and every citizen pays for these
losses. This is "victimless crime," but you and I are the victims
because we have to
pay for these losses.
Industry
is demanding that the federal government step in and halt this spiraling
crime growth. But law enforcement agencies are fighting this battle with
very little money and support from their parent agencies. Federal and
state agencies say they have to use their dollars to fight drug pushers,
street gangs and crimes against tourists-crimes with victims.
Someone
must realize, however, that unless we can stop crime in the workplace
and the theft of product, we will never stop crime against our citizens.
The Food Marketing Institute reported that supermarkets apprehended more
than 276,700 shoplifters in 1995, an average of 53 per store. The average
value of recovered merchandise per apprehension was $21.46, and the most
frequently stolen items were cigarettes, health and beauty care items
and meat.
South Florida
area cargo thefts were reported to be over $150 million for 1995. Recently,
the FBI announced the culmination of Operation Stormfront, a stolen product
scam which recovered $11 million of stolen merchandise in the Miami area
alone. A group from south of the U.S., in collusion with workers at various
companies, had insider information on major shipments of computers, computer
components, shellfish, perfume, various electronic finished goods, furs,
firearms, jewelry, currency and other high-value cargo items.
The Engineering
and Safety Service division of the American Insurance Services Group and
Chubb Insurance Group, which insures the high-tech computer industry in
California, estimates that the current $8 billion annual theft rate for
high-tech companies will increase to $200 billion by the year 2000. There
is a robbery related to the high-tech industry every four days in Silicon
Valley. The strong secondary or gray market fuels this activity, which
is highly profitable and carries little risk.
Law enforcement
task forces are being formed in certain areas throughout the country,
but these groups are reacting, rather than taking a proactive approach.
The National Electronic Distributors Association lists the major theft
and related activities affecting industry worldwide as: internal losses,
robberies, burglaries, hijackings, kidnappings and transit losses. It
is essential to prevent as much loss as possible since recovery of stolen
merchandise is unlikely.
Unless the
insurance companies agree on a security standard, and our industry abides,
no full-fledged proactive stance will be achieved. For years the National
Cargo Security Council has been trying to establish a database for the
cargo industry detailing the trouble areas, making industry aware of the
gangs working these areas and alerting industries of the hot items sourced
by these gangs.
It is difficult
to accept this crime epidemic as "victimless" since consumers
are paying to offset this "victimless crime." It is up to every
major manufacturer to install programs and policies that protect and ensure
the safe and secure movement of their product. The industry must realize
its weak areas and reinforce those areas. If your company doesn't have
a security director, there are many organizations that can provide capable
individuals to assess your vulnerability and present workable solutions.
The International Association of Professional Security Consultants offers
a wide selection of qualified individuals in every area to combat and
reduce crime in your company.
In evaluating
your security program, the main ingredient is control. Without it, you
have a limited hands-on relationship with your problem. Without the proper
audit trails, it is very difficult to recreate the crime scene. The proper
use and placement of security personnel, logs, access control and CCTV
helps greatly. By detailing one's movement throughout the workplace, you
are achieving the control required for a good proactive security program.
Always document incidents and above average movements of key personnel.
Reducing
the rapid growth of victimless crime is the responsibility of each company,
their executives and security manager. They must know the movement of
their cargo, who is transporting it and the individuals responsible for
the safe and secure movement of their products. Though your company may
have an excellent security manager completely familiar with your operation,
it is crucial that he network with others to understand the full extent
of these problems and how to resolve them.
The FBI's
Computer Crimes Division estimates the average technology theft nets $450,000
in computer chips and components that are easy to steal, transport and
resell on the black market. Even drug dealers accept these components
as payment for their merchandise. Computer parts are easy to move and
resell in the overseas market, which means less money for drug dealers
to launder. All crime must be treated as a threat, and the penalties must
be severe.
Law enforcement
and private industry must work together. Private industry must create
tight security programs, and law enforcement agencies must supply data
to industries so proper precautionary measures can be put into place.
Good workplace control and severe penalties are a must.
A company with approximately 1,000 employees spends about $450,000 per
year on security, with the average high-tech theft costing about the same
but occurring every four days. If you can avoid this loss by installing
a proper security program, the system will pay for itself.
The Southern
California Cargo Cats provides this checklist on company procedures and
security measures:
Personnel:
1. Require
all personnel, including vendors, contractors, maintenance and clerical
personnel, who can access cargo areas to providea detailed employment
application which contains a photograph of the applicant, a list of his
or her residences and prior employment for the past 10 years and references.
2. Screen
all employment applications to verify address and prior jobs.
3. Have
applicants list all vehicles, including license numbers and descriptions,
they may use for work.
4. Employ
random drug testing and "probable cause" testing.
Driver Guidelines:
1. Implement
a "no stop" policy for drivers picking up containers for local
delivery.
2. Prepare
a driver rules handbook so drivers can be held accountable. Make it part
of the hiring procedures so each driver knows he or she will be terminated
if they violate these company policies. The nature of each company's operation
would dictate applicable policies.
3. Make
sure each driver has a 24-hour phone number for management personnel he
or she can call in the event of an emergency.
4. Use padlocks
on all pick up and delivery units and require drivers to lock all doors
when away from their unit.
Physical
Security:
1. Either
provide your own guards or hire a reputable guard service. Question a
service as to their hiring practices. Insist that the service conduct
the same background checks on their guards as you do on your drivers.
2. Spot
check the guards on an irregular basis to ensure they are on the job doing
what you want done.
3. Place
the guard in an inaccessible area where he or she can monitor activities
on the facility and yet be secure and safe from assault. Make sure they
have good communication and know who to notify in case of a problem.
4. Do a
physical security audit of your facility. Are you utilizing lighting,
fencing and CCTV to the best advantage? Personnel access should be restricted
to those areas of concern to them. Truck drivers don't need to be in the
warehouse, and warehouse workers don't need to be in areas outside their
job description.
5. Limit
yard access after normal hours.
6. Set up
specific procedures concerning type of documentation required before a
driver is allowed to leave the yard. Hold the guard responsible for obtaining
this documentation.
7. Conduct
random lunch box inspections.
Operational
Practices:
1. Establish
operational guidelines that will reduce the chances of being victimized.
For example, if possible, do not leave containers or loaded trailers in
your lot overnight.
2. Do not
accept late deliveries that you will be unable to off load that day.
3. Perform
frequent yard checks at different hours.
4. Make
sure you have complete records of all equipment in your yard overnight,
especially license plate, container and trailer numbers.
5. Make
your facility a tough target. Take advantage of every trick you can think
of to make the thieves' job more difficult.
6. Consider
installing fuel cut-off valves, tracking devices and other security devices
on your equipment. Heavy-duty padlocks should be mandatory on trailer/container
doors.
7. Install
high-quality pin locks on trailers or containers that must be left in
your yard overnight.
8. Limit
the number of employees who have access to shipping information.
9. Get to
know police officers working in your area. Make it a point to acquaint
them with your operational procedures.
10. Set
up a recording procedure, including a substantial reward, so company drivers
and other employees can and will provide the company with information
on possible criminal activity.
11. Install
time-lapse surveillance cameras in your yard and place them in such a
way they clearly identify a driver and tractor/trailer leaving the yard.
12. Paint
numbers on the roofs of tractor/trailers so they are visible from the
air.
It is unfortunate
that in today's economy these procedures govern the manner in which we
must do business. The growth of the security industry by the year 2000
will be almost unbelievable, but so will losses to industry in general.
Everyone in industry today must realize that every precaution put into
place today will help change the dire predictions for a few years hence.
If you wish
to enlist the services of a qualified security consultant, check his or
her background, ensure they are not product affiliated and that recommendations
will be appropriate for your company's needs. Become educated and be aware
of your security needs. In the long run, good security practices don't
cost money; they save you money and help you retain the profit you rightfully
earned.
©Harold
Frank
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