What used to be seen as isolated incidents of embezzlement, data theft, and procurement scams are now surfacing across sectors with alarming frequency. Drawing from multiple recent reports, it's clear that internal fraud has emerged as a serious concern for Indian businesses, shaking the foundation of workplace trust.

From forged documents and vendor fraud to unauthorised transfers and confidential data leaks, employee-led fraud is increasingly making its way into boardroom discussions—and courtroom filings.

Here are just a few of the high-profile cases reported in the past few months:

• Senior finance executive in manufacturing firm: Arrested for siphoning off ₹7 crore via fake vendors.

• Hitesh Mehta, General Manager at New India Cooperative Bank: Arrested for allegedly embezzling ₹122 crore from bank safes.

• IT professional in Singapore: Caught accessing confidential data and reselling it to competitors.

• Axis Bank fraud in Bengaluru: Four individuals, including a manager, arrested for stealing sensitive data and siphoning off ₹12.51 crore.

• Ramakant Shankarmal Pilani, former CEO in Delhi: Arrested for allegedly swindling ₹20 crore in loans from NBFCs using forged documents.

These indicate a systemic issue rather than isolated misconduct. What’s worse, many experts believe that the actual number of frauds is much higher, with several cases remaining undetected or quietly settled out of court.

At the heart of this surge in criminal disloyalty lies a deeper rupture: the erosion of the psychological contract between employers and employees. As economic uncertainty lingers, layoffs loom large, and automation threatens traditional roles, a growing segment of the workforce feels more expendable than empowered.

This sentiment, combined with access to sensitive data, remote work environments, and digital loopholes, creates a fertile ground for malfeasance. When employees perceive a lack of reciprocity—be it in terms of career progression, compensation fairness, or workplace respect—some rationalise unethical behaviour as a form of balancing the scales.

The result is not just criminal activity—it is a slow corrosion of corporate values. Leaders must ask themselves: Have we unintentionally cultivated a climate of distrust?

Organisations often focus on compliance measures and surveillance technologies to combat fraud, but these are merely reactive tools. The true antidote to internal fraud is a culture anchored in values, transparency, and genuine engagement.

Research has consistently shown that workplaces with strong ethical cultures and high trust environments report fewer instances of fraud. Leaders must therefore ask: Are we creating cultures where employees feel seen, heard, and fairly treated? Are our reward systems and promotion practices reinforcing values or encouraging shortcuts?

Moreover, ethical behaviour must be modelled from the top. Tone at the top has a cascading impact—leaders who act with integrity and hold themselves accountable build a culture where misconduct is less likely to take root.

Redefining risk management

Risk and compliance departments need to evolve from being watchdogs to becoming business partners. Rather than merely reacting to red flags, they should be embedded in strategic decision-making, talent planning, and culture audits. Predictive analytics, whistle-blower protection, and real-time audit trails must become standard tools in the fraud-prevention arsenal.

It’s time for leaders to stop viewing fraud risk as a footnote on quarterly reports and start treating it as a boardroom priority. Strong internal controls, coupled with transparent communication and accountability mechanisms, can deter potential wrongdoers and reassure honest employees.

Crucially, companies must move away from the outdated mindset of “it won’t happen to us.” It already is happening—everywhere! The cost of employee-related fraud is not just financial; it deeply damages reputation, morale, and stakeholder confidence.

While numbers and analytics can reveal the scale of the problem, they cannot fully capture the human cost of internal fraud. When betrayal comes from within, it shakes the very foundation of trust on which teams are built. It fosters suspicion, discourages collaboration, and chips away at morale.

Employees who see wrongdoers go unpunished, or ethical concerns ignored, often disengage—or worse, follow suit. For leaders, the challenge is to not only stop fraud but to ensure that ethical employees feel protected and valued.

This means celebrating honesty, rewarding transparency, and listening to uncomfortable truths. The silent signals of discontent—resentment, detachment, fear—must be heard before they turn into criminal acts.

The road to restoring workplace trust requires a dual approach—tightening safeguards while simultaneously deepening human connections.

This means:

• Investing in leadership development that prioritises ethics and empathy.

• Encouraging open dialogue where concerns can be raised without fear.

• Reinforcing purpose and values at every level of the organisation.

• Creating fair pathways for career growth and recognising contributions authentically.

• Conducting regular culture health checks and acting swiftly on feedback.

A workplace culture that breeds loyalty doesn’t happen by accident. It is built—deliberately, consistently, and collaboratively. Therefore:

• Leaders need to recognise that culture is a business asset as critical as capital or technology. If fraud is on the rise, so too must be leadership’s commitment to culture and ethics. Prevention is not just the domain of HR or compliance—it’s a shared responsibility that begins at the C-suite.

• Leadership visibility matters. Walking the floor, engaging with employees across levels, and being present in moments of change—all these actions reinforce a message: we care, we watch, we listen.

• Leadership must also equip managers with the tools to lead ethically and detect red flags early. Often, middle management is the first line of defence—but only if they’re empowered and trained.

It’s time to reimagine loyalty—not as a relic of the past but as the most important currency of the future workplace. And that starts with leadership. Because in today’s business climate, the real ROI lies not just in returns on investment—but in returns on integrity.