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We need to be mindful that Bologna is interested in fraudulent acts both by and against the corporation, and several of his warning signs are geared accordingly, but this does not sound like a great place to work. One would suspect that if an organization met all, or even most of, these criteria, an employee thinking about fraud would be tempted.
Cressey, among other theorists, has observed that revenge may be one of the motivating factors in employees committing frauds against their employers. If that is indeed true, one of the more classic euphemisms of the 1980s and 1990s may be providing more than enough rationale. Downsizing, driven by a variety of financial factors, became an all-too-frequent event for many U.S. workers. Lowell E. Hofmann, president of the National Organization of Downsized Employees, estimates that between January 1991 and April 1994, approximately 2.5 million Americans lost their jobs through such actions. The New York Times is reported to have conducted a survey in which it found that 72 percent of Americans had either been downsized themselves or had a friend or relative who had been. Mahiuddin Laskar, of the MBA program at the University of North Florida, cited a study by the American Management Association that found between one-third and one-half of medium and large U.S. firms had downsized every year since 1988.19
Several commentators and forensic investigators have speculated that in such an environment it is only reasonable that some employees will seek revenge, and a portion of them will resort to committing fraud against their employers. Were this not bad enough, even for those not directly affected by a given downsizing, the message may be clear. There is no longer an expectation of loyalty on the part of the organization; why should I be loyal in return?20
KPMG, in their 1998 Fraud Survey, is reported to have concluded that the following factors seem to be causes or indicators of employee fraud:21
THEORIES OF OCCUPATIONAL FRAUD
• Personal financial pressure
• Substance abuse
• Real or imagined grievances
• Ongoing transactions with related parties
• Increased stress
• Internal pressure to meet deadlines or budgets
• Short vacations
• Unusual hours
While the characteristics enunciated in the KPMG survey appear to be fairly similar to those of several other researchers, Gottfredson and Hirschi put forth a theory in 1990 that took a different tack. In the course of developing and presenting their work, A General Theory of Crime, they did not do specific research on workplace fraud in particular or, for that matter, white-collar crime in general.22 Rather, after exploring the history of theories of human criminality, they examined competing theories of crime causation, such as those espoused by the schools of biologic, economic, psychologic, and sociologic positivism. Within each tradition and its constituent theories, they found what they perceived to be flaws of logic, weaknesses of research design, or both. Because of this, they argue, there is no robust, verifiable, general theory of crime. They are especially disdainful of those who contend that certain subspecies of crime, such as street gangs, have a special causation and dynamic that merits their being singled out to be the subject of a specialized theory. Given this position, they likewise reject the need for, or the accuracy of, any special theory devoted solely or primarily to white-collar crime or workplace fraud.
Gottfredson and Hirschi argue that criminals exhibit the following characteristics:
First, they opine that relative differences in levels of self-control tend to remain stable throughout life, even though they are established in early childhood. As a corollary to this, they believe that the mediating structures of adult lilfe, to include the criminal justice system, have relatively little effect in constraining those with low levels of self-control.23
Their theory rests solely on a basis of weak self-control, leading to a tendency to seek immediate gratification in varying forms—some criminal, some not. With regard to those acts in the criminal category, Gottfredson and Hirschi dismiss issues such as probability of arrest or length of sentence as irrelevant, arguing that from the perspective of the offender the decision to offend is not weighed or rational.
Second, they argue that since weak self-control is, in their theory, an inherent personality characteristic it is likely to manifest itself in any number of manners, from drug use through reckless driving. Because of this, they reject those theories that argue that one set of behaviors, say drug use, is likely to promote another, say committing burglaries to support that drug use.24
In this regard, Gottfredson and Hirschi appear to be close to the informal observations made by Leuci that 5 percent of the people in any organization are dirty. In Leuci’s view, no matter what the organization does to police them, they are still going to try to beat the system. Without buying into all of the implications and conclusions of the general theory, it is easily possible to think of people we know and people we probably work with who always seem to have a deal or a scheme going, be it petty or significant. Some appear, by nature, to be interested in always pushing the envelope, and they may be quite successful in avoiding the consequences for lengthy periods. Whether this is an adequate theory of workplace fraud is, to my mind, another matter, at least at this point.