Foresight
Ghosts in the Workplace:
Detecting and Preventing Payroll Fraud in the Workplace
Written by Jonas Ileka
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n increasing number of businesses face the haunting phenomenon of ghost employees draining companies of their resources and undermining their financial stability. These ethereal figures lurk in the shadows, existing only on paper, yet their impact on organisations can be very real and detrimental. Ghost employee incidents typically involve individuals fraudulently listed on an organisation’s payroll but do not work for the company. They can be fictitious people or former employees who were not removed from the payroll system after leaving the company. This practice allows perpetrators to syphon funds through unauthorised salaries, benefits, or bonuses, causing financial losses and potential legal consequences for the organisations involved. In Namibia, there have been several instances where government entities and private companies have discovered ghost employee schemes. These schemes are a form of internal fraud that can persist for extended periods before detection, and they often involve collusion between dishonest employees and individuals responsible for payroll processing.
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Prominent Cases In 2022, a fish processing plant in Walvis Bay discovered 127 ghost employees on their payroll. This list included former employees and their family members. It was reported that this scheme costed the company between N$2.22 million and N$7.94 million. Management decided to cease salary payments for the ghost employees pending investigations, and requested that the employees themselves contact the company to verify their previous employment details. In another incident, a government ministry discovered a ghost employee scheme between 2017 and 2018, totalling N$13 million. The ministry took internal disciplinary measures and laid criminal charges against the 23 staff members implicated in the matter. Additionally, the ministry implemented strategies and controls to mitigate these challenges by implementing an annual payroll verification and headcount exercise, and conducting monthly pay sheet reconciliations. In 2023, an audited financial report for another ministry found that deceased workers’ compensation were still active on the ministry’s payroll.
