Philippine lawyer explains why centralized control and weak oversight create perfect conditions for payroll fraud, and how to build cultures where misconduct can't hide
The Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, recently dismissed two supervisors over a ghost employee scandal, imposing maximum penalties that include forfeiture of benefits and lifetime bans from public service.
The case involved falsified attendance records for staff members who continued to collect salaries without reporting for work—a scenario that raises urgent questions about internal controls across all sectors.
What systemic blind spots allow payroll fraud to flourish undetected? How can organizations catch abuse before reputational and financial damage compounds? And what legal exposure do officers face when oversight fails?
To understand these vulnerabilities and what HR must do differently, HRD Asia spoke with Atty. Gabrielle Fuentes, a Philippine-based lawyer handling commercial, employment, and civil cases.
Fuentes explains that the most significant vulnerability in systems that enable ghost employees isn't inadequate policy. It's how organizations distribute power over payroll functions.
"When the same person or small group controls the creation of employee records, payroll approval, and fund release, there is no natural check or counterweight."
Consider a typical scenario: an HR manager creates employee profiles, a finance...
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