The Hit

by Michal Hartstein

  When Shirley Navon started working for Panda, Sigal did not even notice her existence. When it was decided that Shirley would stay with the company, she was teamed up with Sigal to help her with everything related to supplier payments. At first, Sigal thought that Shirley was like all the other Economics and Accountancy students: snobs so busy calculating their way to the top that they would rather not spend time on their dull, routine work. Soon, she found out that Shirley was made of an entirely different substance. It was hard not to like her. Apart from her attractive, pleasing appearance, Shirley had been endowed with a radiant personality. She was always eager to help, never flinched from doing the dirty work, and was the only one who behaved affably toward Shai Hakim, the department weirdo.

  The whole story had actually started during the Passover vacation, almost two months before the murder. Most of Panda’s employees were on vacation. Sigal made sure that her vacations were not too long and that they overlapped the general vacations, so that nobody would meddle with her computer. She did not realize that Shirley had asked to work during Passover to earn some overtime. On one of those days, a supplier called the department to find out why his payment had been delayed. Shirley checked his card and noticed a cancellation order for the sum of 58,000 Shekels. She asked the supplier if he had received that sum, and he said he had, indeed, received it, and that he wanted to check about another sum. Shirley's suspicion was sparked.

  When Sigal returned from her vacation, Shirley asked her about it. Sigal explained that, orders were sometimes corrected because of changes to a bank account or something like that, and that everything was alright.

  Sigal thought that this was the end of the story. However, Shirley ran into a similar order a few days later, and again asked Sigal about it. Sigal provided some sort of excuse, but noticed an odd flicker in Shirley's eyes. It appeared to her that Shirley did not believe her. That day, Sigal stayed after hours. When Shirley finished work and the floor was deserted, Sigal went over to the workstations in the open space. Shirley's workstation was well-organized, and Sigal did not find anything suspicious there. However, Sigal did not want to take any chances. She turned on the computer and entered the standard password each employee received upon joining the company. To her delight, Shirley had not changed her password. Sigal opened Shirley's mailbox. Among the incoming messages was a message from the Service Department of the software house. Sigal was devastated. Shirley had sent a query about Storno money movements.

  There was no room for doubt. Shirley was suspicious. Sigal realized that, when Shirley delved deeper, she would discover the truth. Sigal deleted the response message from the software house and decided to load Shirley with plenty of work so that she would forget about it.

  That was on Thursday. By Sunday, Sigal had changed her mind. She realized that a heavy workload could only be a temporary, partial solution, and that the only way to prevent Shirley from getting to her was to eliminate her.

  "Didn't you have any feelings of guilt?" I asked her.

  "I had, and still have, lots of feelings of guilt," she said without sounding too sincere. "It's hard for me to explain my feelings during that period. I was stressed out. I had my back to the wall. I didn’t want to be separated from my kids."

  "Do you now realize that you’ll be separated from them for many years?"

  "Yes," she said and started crying again.

  CHAPTER 24

  Panda's conference room was set up for one of the most difficult meetings in the company's history. I arrived with Gilad about fifteen minutes before the scheduled time of the meeting. We sat down in the same seats we had used last time we were in this room, but then we noticed name tags at each place, indicating a formal seating plan. We searched for our names and were surprised to see that we had been placed to the right of the CEO. I studied the name tags. In addition to Orna, Guy and Yoel, whom I had already met, I saw the names of several managers, members of the board of directors and representatives from the public accounting firm representing the company.

  Two grim-looking young women placed bottles of soft drinks on the conference table and asked us if we would prefer hot drinks. Gilad asked for a long espresso and his request was promptly fulfilled.

  Within a few minutes, the room was full of men in suits. Gilad and I stood out in our jeans and tricot shirts. There was a rumble of whispers and agitated murmurs in the air, which stopped the minute Victor Frankel entered the room.

  Victor went slowly to his seat, looked at me and said dramatically, "Dear friends, we have convened here today for an emergency meeting due to an extremely irregular incident that took place in our organization. I thank all of you for coming at such short notice. I know that, for some of you, it was a genuine inconvenience. Even though I can guess that most of you know more or less what’s involved, I’d like to dissolve the vague rumors and explain the difficult situation in which we’re caught up."

  He paused, took a deep breath and continued. "We have two police investigators with us," he pointed to his right, "who will give you the details of their findings later, but I’ll provide you with the background. Less than a month ago, we lost a young promising employee, Shirley Navon. Shirley was a bright Accountancy student who worked in our Finance Department. Her death was presumed to be a regrettable accident in the crossfire between crime gangs. However, the police investigation revealed that the hit was directed at Shirley herself."

  Cries of astonishment were heard around the conference room. Victor asked to continue and the voices subsided. "The investigation suggests that the one who initiated this heinous murder is, in all likelihood, another Panda employee, a veteran and esteemed employee in the Finance Department - Mrs. Sigal Elad."

  This time it was difficult to quell the cries of astonishment. Victor was compelled to knock on the desk in order to silence them. "To the best of my understanding," he continued when the room was silent again, "Mrs. Elad has refused to admit any culpability. However, the evidence collected has determined that her motive was embezzlement of company money, which Shirley Navon had discovered by chance."

  The rumblings were building again. Victor allowed his employees to digest his words and waited until the room was silent again.

  "I’ll let these capable, talented police investigators who cracked the case swiftly and efficiently, have the floor now," Victor concluded, and he sat down.

  I got up and looked at the attendees. Their expressions indicated that the situation was unfamiliar for them.

  "Shalom. I’m inspector Hadas Levinger, in charge of the murder investigation of the late Shirley Navon and Koby Ozri. Mr. Frankel related the chain of events very well and there’s no need for me to expand upon it, except to give you a minor update. A little earlier, the suspect admitted her involvement in conspiracy to commit murder and in embezzling money from Panda in the course of her work as a controller's assistant."

  I took a deep breath and allowed my words to sink in. Any hopes some people may have had that it was all a regrettable mistake faded away. "Before we convened here, I met with my colleague, Gilad Shavit. Gilad is a public accountant and financial investigator for the Israel Police. According to the data, over the last five years, Sigal stole at least ten million Shekels."

  A ruckus broke out in the room. Yoel and the public accounting firm's representatives started to exchange vigorous whispers and passed folders and documents between them. Victor Frankel held his head in his hands and turned to Orna, who was sitting to his left, and showered her with questions.

  Gilad had made it clear to me ahead of the meeting that, although it was a large and significant sum that would cause upheaval at Panda, it would not shatter the company. The Panda Company's business cycle stood at approximately two billion Shekels per year. During the last five years, when the embezzlement had taken place, the net profit had not dropped below seventy million US Dollars per year. The sum of ten million Shekels was not substantial for a company the size of Panda, but the damage to its image, once the
story went public, would be enormous.

  When the ruckus subsided, I invited Gilad to explain the manner in which the embezzlement had been carried out.

  Gilad thanked me and started detailing Sigal's methods, and how she had used the tools of the system to transfer money to her own accounts. The explanation was rather simple, but some of those present had difficulty understanding it and asked many questions. To cut short an exhausting series of repeated questions, a member of the board of directors, who had been silent up to that moment, writing comments for himself in a small notebook, stood up and asked to speak.

  "If I understand correctly," he said, and looked at his notebook, "for at least five years, a lower ranking employee was actually conducting duplicate expense registration. The first time, she paid the supplier who had, indeed, provided the service, and the second time the expense was registered against a payment made to her personal account."

  "You understood perfectly," Gilad smiled. It appeared that the penny finally dropped after an hour of explanation.

  "What I don't understand," the man continued and turned to look at the public accounting firm's representatives and the C.F.O., "is this: how could it happen that, for five years, duplicate expenses were registered, money was transferred to accounts that did not belong to the suppliers, and nobody noticed? Don't we have any internal controls? Where were the public accountants for five years? This embezzlement involves fictitious expenses in the order of millions. How come nobody noticed?"

  "Ephraim," said Victor, "I don't think this is the time or the place."

  "Why not?" Ephraim burst out. "This is exactly the time and the place. I’m tired of being silenced in board meetings. How many times do I have to say that the Finance Department is managed unprofessionally and that the public accountants do not conduct a sufficiently good audit?"

  "Do me a favor," called out Yoel. "You have your own agenda. You want a different C.F.O. instead of me - you want your friend as the company CPA!"

  "Enough!" Victor got up and pounded the desk with the palm of his hand. The pounding was so strong that I was afraid the desk would fall apart. I looked at Victor's palm. It was red. Victor clasped it with his other hand to alleviate the pain. "We’re in a very sensitive situation. It's unnecessary to add fuel to the fire." Orna nodded in agreement. There were tears in her eyes.

  Victor sat down and continued massaging his sore hand. "Shlomo," he turned to the public accounting firm's representative. "I also would be happy to understand how, indeed, you failed to detect this embezzlement during your audits."

  Shlomo smoothed his tie with his hand, cleared his throat, smiled a little smile and delivered a short, formal speech that, I had no doubt, he had prepared in advance.

  "Victor, management, and board members - I regret that we have to attend such a difficult meeting. However, I cannot respond to financial questions without seeing the complete data. I would be obliged if the esteemed investigators could transfer the relevant materials to me so that we can study them and respond to them."

  He turned to look at me and stretched his lips in a thin smile. I responded with a wide smile.

  "I certainly don't underestimate the police investigation," he continued. "And I believe there is something to it. However, as is well known, my profession is not one of belief, but one of knowledge. Therefore, everything I will say now is based on the assumption that the investigation’s results are, indeed, correct, and embezzlement actually took place in the company. It’s very important for me to clarify a few points: the audits we conduct within the company are only samples. We do not go over, nor are we supposed to go over, all the company's records. In addition, it is not our job to look for and find embezzlement. If we find evidence of embezzlement during our routine audits, it is our duty to report it. I emphasize, we do not have a legal or ethical obligation to detect embezzlement."

  "So you mean to tell me," Victor cut him off, "that were it not for Shirley Navon's alertness, Sigal would have continued to steal from the company quietly for many more years?"

  "That’s not what I said. Any embezzlement is exposed in the end," said Shlomo. "It's only a matter of time. According to the description given to us by the investigator earlier, I can say that embezzlement on such a scale points to a problem in the company's policies and procedures, and its internal controls. I’ve no doubt there’s a loophole that made this embezzlement possible. Our office, by the way, has an internal controls department, and it can provide comprehensive internal control review and identify additional problems and lapses."

  "For an additional fee, I'm sure!" Ephraim could not restrain himself again.

  Victor's eyes seemed ready to shoot arrows of fire at the insubordinate board member, but this time the veteran public accountant retorted. "Yes, Ephraim, for an additional fee." He emphasized the last two words and continued. "We are professionals, and there’s no reason not to be compensated for our difficult, professional work. You don't sit here on a voluntary basis, either." Ephraim lowered his eyes like a scolded kid.

  The meeting was adjourned and people started to disperse. Victor asked Gilad and me to stay in the room.

  "I’d like to thank both of you," he said after the last attendee had left and his assistant, Natalee, had closed the door. "You did an exceptional job. If you ever decide to leave the police, I’d like to be the first to know about it."

  "Thank you," we both said in unison, and giggled in embarrassment.

  "I’m sorry you had to witness our dirty laundry, but I’m sure you’re used to it."

  "We've seen dirtier laundry," laughed Gilad.

  "Gilad, you’re a CPA, right?"

  "True."

  "I’d like to ask you about the discussion that took place here. Was the public accountant right? Is he really not supposed to detect such embezzlement?"

  "I agree with him on principle. It’s not the job of the public accountant to search for embezzlement. He’s not required to check all the records, but, like he said, to conduct a sample audit. I also agree with his assumption that it’s difficult to identify fraud on such a scale. It involved a small sum, relatively, for Panda."

  "Then, in your opinion, it wasn’t possible to detect the embezzlement?"

  "I’m not sure of that at all. I agree with Shlomo that, at some stage, the fraud would have been discovered, but probably from within the organization and not through his audit. The fact is, the person who detected the problem - and because of it, she’s no longer with us - was a Panda employee, not someone from the public accounting firm. Personally, I think there’s a blunder in the study of Accountancy, and therefore the chance that a public accounting firm will detect such fraud is close to zero. Don't think for a moment that another firm would have done a better job. Those who actually conduct the audits are interns or rookie public accountants. They don't have the tools or the knowledge to examine the data thoroughly. Regrettably, this case won’t change the regulations. It concerns a small embezzlement. The one to incur the consequences will be only the defendant. When there are more substantial embezzlements, like the affair that led to the Enron crash in the United States a decade ago, or the embezzlement of Ettie Alon, which crushed the Israel Commerce Bank, then the legislature intervenes and procedures get changed."

  Victor was listening, his forehead wrinkled.

  "If you want," Gilad said in an attempt to reassure him, "I can recommend a few consultants in the field who can conduct a review of your internal controls and provide recommendations for new policies and procedures."

  "That sounds exactly what we need. Thank you," said Victor.

  We went down together to the lobby. The concourse in front of the building was bustling with journalists and news crews.

  Victor explained the chain of events concisely. Then we answered a few questions. It was evening. I knew what the news broadcasts would open with tonight.

  "I'm beat," I told Gilad when the improvised press conference was concluded.

  "Do you want to get
something to eat?"

  "That would be nice," I said. "There are several nice cafés around here."

  We walked several yards and stopped in front of the Zelda Café. The shuttered display window had been replaced with a new window that was still marked with wide duct tape.

  "You want to eat here?" asked Gilad.

  I nodded and we stepped inside.

  DEAR READERS

  In the last chapter of the book you have just read, it was proposed that it was not the job of the public accountant to detect embezzlement.

  Before I get into the depth of the matter, I’d like to diffuse the vagueness concerning anything associated with the profession of Accountancy, which, regrettably, a considerable part of the population does not understand – not its purpose, nor its function.

  Accountancy is a field that deals with the recording of financial data. The majority of financial recording existing today is based on bookkeeping, which is a method of recording financial transactions. The most common bookkeeping method in the world is the double entry method, which was developed at the end of the fifteenth century by an Italian friar named Luca Pacioli.

  Public Accounting, in contrast, is a more recent profession that developed in the nineteenth century, during the Industrial Revolution. The background for the development of the profession was the dissociation of capital owners from managing businesses and the establishment of corporations. The capital owners received financial reports from the company managers, and wanted to know if the reports reflected the company's condition accurately. Thus, the need for an external agent to examine the reports was created, and a new profession was born: the public accountant.

  A public accountant is a reviewer. He arrives at the company, reviews the financial records and the financial reports, and confirms that they do not contain substantial errors. Due to the nature of his work, a public accountant cannot be a company employee, but rather an external agent.