All The News Not Fit To Print p. 9

By: Mark Fitzgerald

Newspapers almost never publicize theft or embezzlement
committed against them, according to purchasing managers sp.

WHEN PALM BEACH Post purchasing manager Betty Finley went looking for information on the extent of theft and embezzlement in the newspaper industry, she came up empty.
"There simply is no data on theft and embezzlement in the newspaper industry," she said.
Yet when Finley asked the 50 managers attending the recent Newspaper Purchasing Management Association convention to anonymously submit examples of theft or embezzlement at their papers, she collected about a dozen in less than five minutes.
Among them:
? A former purchasing manager who arranged with an office supplies vendor to inflate prices and split the excess. The fraud cost the paper "thousands" before it was discovered and the purchasing manager fired.
? A pallet theft scheme that was costing a paper $300 to $400 every month.
? A production executive at a newspaper chain's commercial printing unit who ordered a new printing press and then had the old press dismantled ? which he then bought at a low price. There was no question of firing this manager: He quit and used the press to go into competition with his old shop.
? A marketing executive who turned his paper's long-running contest into a piggy bank. The weekly contest paid a $500 cash prize. This executive gave contest answers to friends and family and split the prize.
? The accounts payable clerk who set up a dummy corporation, issued invoices on the front ? and approved payment. Though the scheme was detected within four months, the clerk had already collected $50,000. At the same time that the fraud was discovered, the paper also found that the employee was a convicted felon who had run the scam at another business.
? A long-running theft of chemicals and equipment that went to the private printing operation of a newspaper's employee. Total losses: $2 million.
Along with the fact that these thefts targeted newspapers, they had one other characteristic in common: Once the fraud was discovered, it was almost never publicized by the paper itself.
"It's obvious we [newspapers], too, fall into the group that would rather not admit we are quite often victims," Finley told attendees of the 37th annual NPMA meeting in Minneapolis.
When Finley's own paper was victimized by a repair fraud from an outside company, it was loathe to admit it ? even when the con man's arrest made the papers. "We didn't want to be part of the story. We, too, didn't want to publicize that we had been defrauded in some manner," she said.
One rare exception in the newspaper industry was the lawsuit filed last December by the York, Pa., joint operating agreement accusing five top marketing executives of using the newspapers' time, equipment and confidential information to operate a competing direct-mail advertising business (E&P, Dec. 11, 1993, p. 43).
More often, Finley said, the tendency ? just as it is in other industries ? is to cover up.
In the case of the commercial print shop manager, for example, no action was ever taken against the man. And if the most egregious thefts go unpunished, it's not surprising that smaller transgressions are tolerated.
At the Post, for example, employees were stealing polybags in various amounts and for various purposes.
Some took just a few for use as freezer bags or disposable diaper bags. A few carriers, however, were stealing the polybags by the case and selling them to competing newspaper carriers. That problem was stopped by securing the bags, Finley said. In much the same way, thefts can be prevented by simply keeping track of what a newspaper has.
"How many of you can locate all your cellular phones, beepers, laptop computers, external modems and photography equipment?" she asked.
Newspapers need to reexamine security and make no assumptions about employees "no matter how long the employees have been there and no matter how dedicated you think they are," Finley said.
That includes purchasing managers, Finley told her NPMA colleagues. "We purchasing people, we are in an ideal position to embezzle."