Canola Payola

What started as a simple kickback scheme to boost product movement by one transloading company turned into an inventory theft operation that stole nearly $5 million in canola oil over a 2-year period. 

Shawn Sawa, an area manager for a food processing company selling canola oil to ranchers for livestock feed production, colluded with Richard Best, the owner of a transloading company which moved the oil from rail to truck then delivery.  The stolen oil was sold on the blackmarket and enriched Sawa and Best. Sawa submitted falsified inventory reports to his company to hide the theft, and the proceeds were laundered through bank accounts in the name of Sawa’s spouse. Best even provided an old cell phone from his deceased mother to conceal his communications with Sawa from the food processor.

Kickback schemes are difficult to detect, but inventory theft is more readily revealed and deterred with periodic and random stocktaking. Management involvement and implementation of internal control policies, like periodic and random inventories, could have revealed the theft early on and saved the company nearly $5 million in revenue. Sawa and Best will serve federal prison time, but that doesn’t recoup the lost revenue.

Brought to you by your independent Certified Fraud Examiners at Fittz & Associates.