Business Crime Contractor Scam Sends Shockwaves at BASF – Fraud Cost in the Millions for Chemicals Giant
German chemicals behemoth BASF has been the victim of scam accounts and billing frauds: Four employees of the chemical company are said to have cooperated with external firms to settle services that were never provided. This caused damage in the tens of millions.
Ludwigshafen/Germany - Unrest at the flagship company of German chemistry: As reported by local media with reference to daily newspaper Rheinpfalz, the chemical company has been scammend for several million euros for years. During the course of criminal investigations, the apartments and offices of four BASF employees and five representatives of external companies were searched in January. The employees are apparently part of the chemical company’s personal department’s lower management level and are now discharged. The external companies in question are five firms that operate in the personnel leasing sector.
According to BASF, internal audits last year raised the suspicion arose that external suppliers had billed services, which were never provided. According to newspaper SZ, the fraud is said to have dragged on for several years. The group provided no details about why this scam was detected that late, despite internal control mechanisms. The defendants will be charged withfraud and bribery under the company's code of conduct. One of the four accused BASF employees is said to have taken his own life, according to the Rheinpfalz.
Cases of Fraud Discovered in 2009 and 2010
The current scandal is not the first time that the chemical giant is victim of scams: Fraudulent offenses were detected as early as 2009 and 2010. In one case, a BASF employee and eight other persons were sentenced to fines and imprisonment in 2012 after lengthy preliminary investigations, according to the Rheinpfalz. Scaffolding and line construction were wrongly billed in 2009, resulting in damage of up to 1.5 million Euros. In the course of the investigation, the group is said to have discharged six employees without notice.
In 2010, the theft of a total of 300,000 europallets became known. Over the course of several years, several hundred pallets were taken out of the factory and resold each day. As a result, the company suffered losses of around two million Euros, continues the Rheinpfalz. A BASF employee and at least six external workers were convicted for theft.
Despite tightened security and control measures due to the previous cases, fraudulent offenses can apparently not be completely prevented, as the current case shows. The scam is one of a series of negative headlines within the last two years, gnawing on the flagship image of the world's largest chemical company.