How to investigate ‘Moonlighting’ and other employee misconduct, fraud & corruption? Robust Due Diligence vs Traditional BGV
Posted on Oct 17, 2022


In recent days the term ‘moonlighting’ has become a hot topic especially in the IT industry. The IT giant Wipro recently fired 300 of its employees for moonlighting, while other big companies like IBM, TCS, Infosys have raised concerns about their employees doing a side job after working hours. The debate over ‘moonlighting’ doesn’t seem to settle, with divided opinions and lack of clarity, whether it's a moral, ethical or legal issue, or all of these. But the debate has definitely triggered the need for robust due diligence mechanism, enforcement of Business Code of Conduct, and internal investigations especially in the post-Covid-19 times, when the corporates are facing challenges to monitor employee misconduct, the increasing risk of fraud, financial and reputational loss, and of course the legal implications of terminating employee contracts. 


Why are businesses concerned?

With the increase in cut throat competition between the competitive firms; most of the time cases of moonlightings are associated with data breach, data theft, financial error, forgery. Major concerns of the companies are breach of confidentiality, compromise of intellectual property, leak of trade secrets and impact on productivity of the concerned employee. All these issues can expose a company’s business to high risks. In such cases, the approach is not limited to due diligence or background verification but also includes digital forensics and information gathering to provide leads and evidence that reveals the intensity and root of the cases.

In India, where ‘moonlighting’ has become a concern for big companies, there is no specific provision of law which deals with moonlighting, and in the absence of such the industry is itself divided on this issue. Mr. Rishad Premji, Chairman of Wipro equates moonlighting as “complete violation of integrity in its deepest form”. Mr. NG Subramaniam, CFO of TCS called it an ethical issue. But for Mr. CP Gurunani, CEO of Tech Mahindra, it is the need of the hour.

Many corporates and institutions are implementing work from home jobs post Covid-19 pandemic.. The data from Economics Times indicates that there is a huge jump in investigation of approximately 4 times more than in 2019 as the number of employees with moonlighting increased enormously. Forensic investigators found employees who were using the company's laptops for moonlighting but using the same account details for credits. Wipro tracked this employee misconduct through the portal of employees provident fund and found through the Universal Account Number (UAN) that they were also working for competitor companies. 

What is Due Diligence?

The increase in cross-border employees, business partners, stakeholders, vendors and labour force questions the existing due diligence process followed in hiring or onboarding or conducting any business transaction, and necessitates a comprehensive human-intelligence led investigative due diligence to expedite decisions, minimize risk and avoid legal implications. 

The most normally directed checks currently incorporate exploring a person's previous training and work history, checking proficient references and criminal records checks, contingent upon the business and position. Most geographies have no legislation that prohibits companies performing background checks, executive screening or due diligence into individuals or companies as long as you adhere to the local laws that govern privacy.

How does Due Diligence help business?

An investigative Due Diligence is required by investors, HR, lawyers, insolvency resolution professionals and business owners to assess the integrity of the subject identity. Multiple checks are done to identify background information and records, financial status, hidden assets, adverse litigation, social media footprints, political exposure, bankruptcies, regulatory red flags and any other issues of material concern.

Employment Screening for hiring

Taking action against wrongdoers


Franchise/Vendor Onboarding

Partnerships & Agreements

Mergers & Acquisitions


How is Due Diligence conducted? 

Open source intelligence about suspects to build and verify their profile to identify their family and personal information.

Verification through public records and other discreet sources about their professional and personal associations.

Analysis of corporate records about the subject directors and the related persons and entities.

Discreet pretext inquiries with associates, relevant acquaintances, previous and current employees/partners/stakeholders or any other relations, to profile the target.

Discreet inquiries with well placed sources to ascertain political exposure, alliances, associations and affiliations

Mapping the social media profile through exhaustive analysis of social media footprints.

Understanding the lifestyle, general reputation and social standing of the target.

Challenges faced by employers

Thomson Reuters highlights four biggest challenges which are faced while conducting due diligence. 

In the interviews with the Forrester insight report it was concluded that the due diligence is sometimes avoided as it is intensive and requires too much employee labour.

The data provided by employees aur any person in association is sometimes unreliable. It can be outdated, copied or even far from the truth thereby hampering the accuracy of data. 

The other factor to be highlighted is that the given data is not clear and sometimes lacks relevant information or context which add more challenges in the process of verification. 

Sometimes, the change in compliance and reporting standards are hard to keep up with. Thereby, deteriorating the focus in conducting due diligence.

With screening being a later improvement and less far reaching than in numerous European nations, it can at times be hard to get reactions to check data at source. Due diligence might take more time than the American or European counterparts, so people generally oversee the verification part. Moreover, much information should actually be confirmed by verifying the data by going physically at source, for instance criminal checks at a nearby town which is challenging. 

Due diligence and background checks are unrestricted and non prohibited as long as the laws related to privacy of the concerned State or Country are complied with. A basic human right under Article 12 of the Universal Declaration of the Human Rights Act, 1948, right to privacy has been given the status of fundamental right and included under the scope of Article 21 of the Constitution of India. Law of UAE also provides for protection of data on an individual and Article 31 of the UAE’s Constitution provides for the freedom of communication by means of post, telegraph or other means of communication and guarantees their confidentiality in accordance with the law. 


Legal and Reputational Risks Associated with Wrong Hiring/Onboarding

In an era of globalisation where competition is cut throat, a single mistake by an employee can prove to be a disaster for the reputation of the concerned company or firm which will eventually reflect in its business. Biggest risk which can be faced by a company in want of due diligence/ background verification are mentioned below:


Negligent Hiring: It is a legal term that describes an employer’s liability for an incident caused by an employee when the employer knew or should have known that the employee posed a risk. By 360 degree-background checks this risk can be eliminated. 

Fraud, Hacking and Cybercrime: Proper explanations and reasons for leaving previous employment by the questioned employee can  be identified by due diligence/background checks and can minimise the risk of hiring a potential fraudster or a hacker which can use vital information of the employers’ business. A study conducted by association of certified fraud examiner Nation in 2014 concluded that global occupational frauds are approximately $3.7 trillion annually. 

Unsafe Environment: An unchecked employee can pose a threat to the peaceful and progresive working environment. Misbehaving with fellow employees, with customers or vendors, violence at the working place, sexual harrasment and teasing of women collegues are some of the examples of this potential risk which can be minimised through enhanced due diligence.

False Credentials: For an employer it will be disastrous to hire an individual who is not qualified for the opening. A report from CareerBuilder reported that as much as 58% of résumés include misleading or incorrect information, such as falsified education details and inaccurate job titles, seniority levels, and employment dates. A professional firm can identify the real qualifications of an individual and remove this risk.


Employee theft, workplace violence, fraud and forgery, and other problems pose a threat to the company's professionalism and goodwill. According to a report published by Legal Service India, the number of registered cases of workplace violence increased 54% from 371 in 2014 to 570 in 2017. Some of these issues may appear unavoidable, but they can be mitigated to some extent by thorough background checks on each and every employee.


Traditional Approach vs Modern Need

The traditional approach towards Background Verifications (BGV) is not justifying the modern need and  because of that organisations face huge loss and consequences. Employers' traditional methods for hiring a potential employee include asking for referral letters, calling previous employers and inquiring about the employee's performance and general behaviour, and so on. These traditional methods have been shown to be inadequate and often fake, because the person providing a referral letter or informing about the employee may have a friendly relationship with the employee, skewing his opinion in favour of the employee.


Due Diligence Investigations@ Intelaw Consulting

Intelaw has a team of consultants, experts and investigators for conducting almost all types of due diligence including but not limited to employment due diligence, HR due diligence, B2B due diligence, Litigation checks.


Advantages of Due Diligence @ Intelaw: 

Verification of educational and employment history of individuals.

In depth investigation of legal, economic, fiscal and financial aspects of a company or individual.

Litigation checks and profiling against a business or individual

Identification of any specific suspicion 


‘Integrity Score’ @ Intelaw - A revolutionary tech powered 69-checks 

Technology enabled dynamic score computation

Aggregate weighted matrix of 69 checkpoints

Provides elimination and selection criteria for recruiters

Enables profitable decision making

Covering wide range of standard and enhanced background and integrity checks

Human Intelligence and Market Intelligence incorporated


For business leaders: Forensic Investigation of frauds & corruption, Integrity Audit & Policy framework, Employee misconduct & labour disputes investigations, Executive Due Diligence, Background Verifications, Loss prevention, Risk & Threat mitigation, Brand Protection & Anti-Piracy Investigations.

For banks, investors & insurance companies: Due Diligence, Background Verifications, Integrity Audit, Asset Trace Investigations, Financial Frauds & Anti-money laundering investigations.  

For Legal & Accounting Firms: Asset Trace Investigations, Evidence extraction & analysis, Financial Fraud investigations.