Cruise Ship
Several years ago a large cruise-ship company realized they were losing approximately $30,000 a month in revenue from each one of its nearly dozen ships around the world. This had been going on for a number of years and none of their internal auditing practices was able to discover the problem.
A large investigative firm was solicited to take on the investigation, resulting in four-man teams sent out to each of the ships. They consisted of two investigators, one person from an outside accounting firm, and one senior manager from the cruise-ship company. The ships covered all of the major cruise routes around the world.
A few dozen interviews were conducted in small conference rooms while the ships were at sea. Organizationally, it was learned that the Greeks, essentially, ran the ships, while Italians cooked the food, Eastern Europeans served the food, and Latin Americans changed the sheets and cleaned the rooms. The Greeks received their pay via direct deposit to bank accounts in Athens, while all others were paid cash—in dollars—every two weeks. Nothing in these interviews revealed how such a large amount of money could have been taken, and the obvious, the casinos, were so closely monitored they were excluded.
An inductive philosophy was then used. Where had anyone seen a large amount of money, and at any time, not even necessarily on a ship? An assistant purser said another assistant purser had purchased a luxury German car in the least expensive way possible. That is, traveling to the factory and paying cash. The two Greeks had flown to Germany where the friend paid an eye-opening amount, “cash on the barrelhead,” for his new car.
The interviewee was asked if they drove the car back to Athens, about a three day trip, and they had. He was asked if they alternated driving, and they had. He was asked if they had stayed in the same hotels, and they had, and if in the same room, and they had. The interviewer paused, and then asked, “And you shared the same bed, too, didn’t you.”
The assistant purser flushed and stammered that it was so, but we could tell no one, he said. His punishment would be to lose his seaman’s book, essentially, his license to have his job. He was told that all the details of the fraud were needed, now, and he complied.
Every six months the assistant pursers change ships, normal company policy, but a few years before, when they all met in Athens, one suggested a scam which he had begun, but realized he would be caught if it happened on only his ship. When they pay the lower workers in the purser’s office, setting out their piles of cash for a dozen or more people at a time standing in the room, they would also set out piles for those on two-weeks leave, which all workers take on a rotational basis. When the workers collected their piles and left, the assistant pursers took the uncollected money and put it out of sight, and then did it again, and again.
Because those in charge of leave at the company headquarters did not have a regular link with the payroll office, the assistant pursers, companywide, were able to steal all of the unearned pay by those on leave every two weeks, so all of the ships were short approximately the same amount. And this fraud, totaling more than $15 million a year, had been going on for years! That is, until a gay assistant purser was asked the right question.
A large investigative firm was solicited to take on the investigation, resulting in four-man teams sent out to each of the ships. They consisted of two investigators, one person from an outside accounting firm, and one senior manager from the cruise-ship company. The ships covered all of the major cruise routes around the world.
A few dozen interviews were conducted in small conference rooms while the ships were at sea. Organizationally, it was learned that the Greeks, essentially, ran the ships, while Italians cooked the food, Eastern Europeans served the food, and Latin Americans changed the sheets and cleaned the rooms. The Greeks received their pay via direct deposit to bank accounts in Athens, while all others were paid cash—in dollars—every two weeks. Nothing in these interviews revealed how such a large amount of money could have been taken, and the obvious, the casinos, were so closely monitored they were excluded.
An inductive philosophy was then used. Where had anyone seen a large amount of money, and at any time, not even necessarily on a ship? An assistant purser said another assistant purser had purchased a luxury German car in the least expensive way possible. That is, traveling to the factory and paying cash. The two Greeks had flown to Germany where the friend paid an eye-opening amount, “cash on the barrelhead,” for his new car.
The interviewee was asked if they drove the car back to Athens, about a three day trip, and they had. He was asked if they alternated driving, and they had. He was asked if they had stayed in the same hotels, and they had, and if in the same room, and they had. The interviewer paused, and then asked, “And you shared the same bed, too, didn’t you.”
The assistant purser flushed and stammered that it was so, but we could tell no one, he said. His punishment would be to lose his seaman’s book, essentially, his license to have his job. He was told that all the details of the fraud were needed, now, and he complied.
Every six months the assistant pursers change ships, normal company policy, but a few years before, when they all met in Athens, one suggested a scam which he had begun, but realized he would be caught if it happened on only his ship. When they pay the lower workers in the purser’s office, setting out their piles of cash for a dozen or more people at a time standing in the room, they would also set out piles for those on two-weeks leave, which all workers take on a rotational basis. When the workers collected their piles and left, the assistant pursers took the uncollected money and put it out of sight, and then did it again, and again.
Because those in charge of leave at the company headquarters did not have a regular link with the payroll office, the assistant pursers, companywide, were able to steal all of the unearned pay by those on leave every two weeks, so all of the ships were short approximately the same amount. And this fraud, totaling more than $15 million a year, had been going on for years! That is, until a gay assistant purser was asked the right question.