EWJ June 2024 web - Journal - Page 89
The UK Economic Crime and Corporate
Transparency Act (2023) for some strange reason does
not apply to the public sector where massive amounts
of fraud occur, especially in procurement and managers
‘skimming’ off public funds. In legislative terms this was
clearly a great opportunity to address fraud across the
board. Fraud investigations in the public sector are notoriously slow and insouciantly and politically selective.
With the losses to fraud in the UK public sector
amounting to a staggering £50.2 billion in one year this
issue alone should have been an obvious incentive to
modify the law. So it beggars belief that such mutually
exclusive, or better put, short-sighted legislation was
drafted. The data of the trends and patterns of fraud
are no different in any detail to those of the private sector. But a notable ‘white-collar influence’ is the now
proven and indefensible cover-up culture in the NHS
and the Post Office (with whistle-blowers treated abominably) which bizarrely inhibits if not self-defeats investigation efficiency; putting image before stopping theft
from the public purse. Hence there is more than a hint
of those at senior levels manoeuvring themselves and
their organisations out of the accountability space.
Squarely down to culture.
Moreover, studies show characteristics of fraud
offenders (age, situation, no previous convictions, et
al) and the proportion of female fraudsters, but these
predilections to providing studies-outcomes should
not confuse the behavioural theories of fraud with the
means of dealing with it.
Thus, those ‘experts’ who claim that gender-based
definitives are also to be found in fraud offender profiling have contributed nothing other than conjecture.
They have not demonstrated in the least anything
more than the fact that both females and males
commit fraud.
The management quandary
Bringing these points together, where does this leave
today’s manager? Moreover, a finance manager? Managers should put less emphasis on the usual ‘type of
fraudster’ banally describing the perpetrator or the
position or appointment - and more on the crime itself to ensure corrective management measures are
put in place to prevent a fraud reoccurring: the key
failing when a company or organisation is repeatedly
hit by fraud, from ‘the inside’ or externally. Added to
managing an excellent investigations capability within
the compliance policy.
Of course, the term ‘white collar crime’ is still used
commonly. Entire departments are titled by the
term. But there is a damaging effect when dealing in
stereotypes and/ or using simplified characterisation
methods which are inimical to detecting and preventing fraud - especially internal fraud. Likewise, questions are raised about policies of dealing with frauds.
According to certain protocols (not definitions of
fraud) a case must be over a certain financial value, or
are 'officially complex' only if the suspect works in a
certain profession or industry, or holds a certain position. Beyond this, it is unclear how certain law enforcement agencies inform their set-up and define
their meaning of 'complex' fraud. In the majority of
cases, it is anything but.
Situational opportunities and settings for fraud when
dealing with crime networks or single-cause offenders
ought to focus on a victim-centric typology of fraud
and how the (corporate) victim was attacked. This
better demonstrates the variety of 'actors' and the
authentic variables we need to know. Collaboration
between co-offenders is not gender-specific - nor
are fraud offenders always at the same level in an
organisational structure.
And so ...
The reality is that fraud criminals usually commit their
crimes in touch with or in-line with their everyday
business activities. But beyond that, and horizontally,
so to speak, there are the employees who operationally
'within' have extensive operational connections. For
example, massive losses to fraud often go to insiders
who are employed in technical positions in the organisation. Likewise, by employees who act either under
pressure from seniors, or are self-motivated for a
range of reasons. Then, the age-old issue of 'trust'
when the heuristics kick in: how such a wonderful
trusted accountant or whoever has been here for 20
years and would never do such a thing’. But the convictions of the likes of Stephen Day (former NHS manager jailed in 2021). But the problem is not discussing
ad infinitum. What happened, but ought to be “where
were the internal controls?” “Where and when did the
auditing plan fall apart?” “Why is taking 20 years to
discover fraud under our own roof ”? “How we do or
don't actually manage this entity?” Losses to trust
exploiters are often the worst of all!
The ‘collars’
"Red collar' crime is used to describe cases when
violent crime follows a 'white collar' crime against the
same victims .... (if murder is committed then one
would have thought that the fraud would be part and
parcel of the murder case evidence - not creating a
pointless type-cast or new 'niche' category of fraud
offender)
'Pink collar'? There has been little recognition of
women committing such crimes, with media focus
mainly on 'celebrity offenders' like Martha Stewart
(who received 5 years' prison, and Elizabeth Holmes,
the Theranos founder, also jailed) and what kinds of
frauds are they involved in, and do their methods and
experiences differ from those of men? The short
answer, is no.
One study by Dr Janice Goldstraw-White raised the
question, why is it so difficult for us to see women as
potential fraudsters? There is no female ‘frilly cuff ’
to match the male ‘white collar.' Well put indeed, because there is no notable difference in behavioural
traits by females in contextual financial crimes, or their
modus operandi.
EXPERT WITNESS JOURNAL
To qualify the point further, accounts from fraudsters
of their crimes often assert a kind of normality and
general acceptability of the behaviour (‘business as
usual’) or portray the offence as an aberration, not
representative of his /her typical behaviour patterns.
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JUNE 2024