Today's Team Member - Tomorrow's Competitor – Case 1

Over the years we have conducted many cases on behalf of business clients who have had their entity effected by former employees, contractors or former partners.

Most business owners rely on their staff or contractors, and business partners to undertake work on behalf of the business. These persons have intimate access to all workings of the business which, mainly include:-

• Client particulars or database
• Service, Product or Administration Methodology
• Pricing and marketing strategies.

Unfortunately many businesses are pre occupied with the most important things…Development of Cash Flow and Increasing Work Load. Many do not implement, or take the following seriously:

• Confidentiality/Non Disclosure Agreements;
• Non Competition Agreements;
• Codes of Conduct;
• Induction;
• Shareholders Agreement;
• Separation Interviews;

Small and medium business owners normally work long hours, without reward. Providing services and product is only part of it. Many hours are spent by owners developing efficient systems aimed at delivery. In many cases it is a lifetime of work and the business owners only, and or, greatest asset.

When a member of your staff or former partner leaves the business they take all of this knowledge with them. They however have been paid for their services or ownership of the business and in many cases did not share the risk the owner had.

A business client engaged us in relation to the following case:-

The client had a showroom displaying and selling stock. Behind the showroom was a large warehouse where our client stored large amounts of stock. The business also had a team of mobile technicians who attended client sites, delivering and installing stock. The business provided vehicles for each technician to undertake this service.

The client received a number of telephone calls from loyal clients who advised the following:-

• 2 technician employees were, during client attendances, advising clients that they were starting their own business.
• These technicians were providing their own business cards, which advertised a new competition business.
• Both advised that they intended to undercut their current employer by at least 20%, as they knew pricing etc.
• Both indicated that they had a large amount of stock on hand.

Our client wanted to achieve the following objectives:

• Lawful Dismissal of both employees without litigation for unfair dismissal.
• Recovery of Stock.
• Criminal Prosecution for Stealing of property as a servant.
• Civil Injunction from undertaking business in competition.
• Prevention for further similar occurrence.

Taking this into account, we used the following Methodology during this case:

• Our client was advised to undertake an immediate, but discreet stock take. This was done and it revealed about $32,000 worth of stock missing. This was the price at cost to the client.
• Our client was advised to analyse his IT system records to identify access by the suspect employees. This imitative identified that one of the employees had downloaded the complete client database, price list, supplier list, and all marketing files. A forensic IT specialist was utilised for this task and evidence formerly recorded.
• Tracking Devices were fitted by us to both vehicles used by the suspect employees. This identified both parties attending a rented storage shed. It also allowed our client to closely monitor both, whilst evidence was being gathered.
• Covert cameras were fitted by us to the clients warehouse area, which recorded a further theft of stock. A tracking device shortly showed this property being transported to the storage shed.
• Clients who had reported the matter, were interviewed by us and formal statements prepared and executed. Business cards still in their possession were recovered.
• All clients serviced by these two employees for the prior month were telephoned and interviewed. Six(6) further statements were prepared identifying similar evidence. Again further business cards were recovered.
• A search conducted, identified the details and name of the new business and ownership by these employees.
• Both employees were confronted by our investigators independently and interviewed with the allegations. Both interviews were covertly recorded on video and audio. When confronted with the evidence both employees admitted to all of the allegations, including the theft of records from our clients computer system and stock. Both persons agreed, independently to show investigators the storage shed.
• All stock was photographed, and clearly recorded. It was then returned to our client.
• Unlawfully obtained computer records were also recovered by us.
• A formal overtly recorded video taped interview was then conducted by our investigations with each employee.
• We immediately served both employees with notices of dismissal. Company property, including vehicle and premises keys, uniforms and tool were recovered by our investigators from both persons.

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