The fraud case of Britta Nielsen: Irony in the “cleanest” country

The case of Britta Nielsen may not have received widespread attention from worldwide audiences, but it gained substantial popularity amongst the Danish public. With Denmark being at the top of the list of nations with the least corruption, this fraud case was a bewilderment to many.

Emil Ellese Ditzel, a Danish TV journalist, mentioned a case he formerly covered as a lesson learned at the European Compliance And Ethics Conference 2022. The case was regarding the embezzlement of social funds by Britta Nielsen, which went undetected for more than two decades.

Britta Nielsen is a former social worker who spent forty years at the National Board of Social Services (Socialstyrelsen), an organization under the Ministry of Social Affairs that distributes funds to the country’s most vulnerable groups, such as the homeless, drug addicts, special needs groups, and others. She stole a total of over USD 17 million during the course of twenty-five years, from 1993 to 2018.

This figure is hardly notable when compared to fraud cases in government institutions in other countries, such as the case of corruption in the COVID-19 funds in the United States. The case, however, is a major blow to Denmark, the “cleanest” nation.

How could her actions have gone undetected for so long?

Chronology of the fraud

Britta, unlike in most fraud cases, didn’t exhibit behavioral red flags. She was known as a simple and humble person, far from being a control freak. She was also a recipient of the Queen’s Medal of Merit for her services to the community. With this behavior and appreciation, there was no reason for suspicion.

No unique method of fraud was used in Britta’s case. In fact, her method wasn’t particularly ingenious, either.

Britta set up fictitious non-profit companies and projects with bank accounts in her name to receive these funds. She also stole funds that should have been transferred to other organizations’ accounts.

Initially, she embezzled modest sums of money. However, over time, she began to steal in substantial amounts.

Initial suspicions were raised in 2012 when a bank reported potential money laundering transactions to the Danish police. Britta’s account had a pattern of high financial transactions and withdrawals involving a horse company and the ministry, therefore the transactions appeared suspicious.

Banks couldn’t understand why their customer’s account was receiving and withdrawing large sums of money, and why the National Board of Social Services was assisting a horse company. Unfortunately, no one responded to this report, since the police department was extremely understaffed at the time.

The case resurfaced in 2018 when her colleague discovered that over $9,700 USD in cash for a housing project had gone missing. Britta fled to South Africa after being drawn into the investigation. She was apprehended in the country with cash evidence.

Why it had gone on for several years

The investigation into this case revealed two fundamentals that caused this fraud to take place over a long period of time. The first is a weak internal control mechanism. There was no systemic control in the financial management of the projects they funded.

According to studies, internal control is the main factor that contributes to fraud. As many as 29% of organizations that are victims of fraud did not have adequate internal controls to prevent fraud from occurring.

Britta served two job functions: changing bank accounts in the system and performing transactions. When in fact, the two functions should not be performed by the same person.

The second factor is trust. Britta had become a very trusted person and was given the mandate to be a ‘guard’ for all systems in the company. In fact, according to Ditzel, not just colleagues but also managers would rely on her. It is no wonder that Britta knew the ins and outs of the organization’s work system without supervision.

This also allowed her to cover the traces of her embezzlement for more than two decades. If any financial problems were discovered, she would take over to cover her tracks.

Indeed, no organization is completely clean of fraud. However, if internal controls are adequate and properly functioning, at least fraud can be detected as early as possible to prevent greater losses.

However, if organizations do not have enough resources to carry out appropriate internal controls, they can cooperate with a third-party organization that provides a comprehensive fraud prevention system. One such organization is Integrity Asia. Contact us for more information about anti-fraud services.

Putri
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