Usually, the first reason that comes to mind when one subjectively attempts to understand why a perpetrator has committed fraud, is that it must have been for monetary gain. While this is true in many cases, it does not ring true in all cases. Academics have found that the human desire for material wealth is a spectrum that ranges from mild to extreme, and this desire can be affected by a need for survival, or simply a longing to possess more. As indicated in Part 1 of this series, criminologist Donald Cressey is of the view that a financial stress experienced by a potential fraudster must be of such severity that the potential fraudster believes it to be ‘non-shareable’. What exactly, then, makes a problem non-shareable?
Every individual, at some time or another, has experienced an issue that he or she feels cannot be explained to – or discussed with – somebody else, whether it be due to feelings of shame, guilt, or a false sense of pride. To elucidate on the pressures experienced by a potential fraud perpetrator, Cressey opted to use cases where financial stress was at the crux of the problem. Therefore, one can comprehend how a serious problem like gambling may be a motivation for fraud. In situations where gambling has become an addiction – resulting in acute financial loss – the afflicted party may be unwilling to seek professional help, especially if he has a family for which he is failing to provide. Herein lies the foundation of the temptations to turn to fraudulent activities to compensate for financial loss. Other examples of financial pressures could be uncontrollable debt, family loans, living beyond one’s means, retrenchment, or an economic recession. It should also be noted that due to the shifting economic conditions experienced by many South African households because of the effect of fuel price increases, escalating electricity costs, and an increase in living conditions in general, an increase in fraudulent practices can be expected.
Notwithstanding these, if the purpose behind understanding the motivations for fraud is to mitigate the risk factors and subsequently reduce the detrimental effects of fraud, then such external influences as discussed above may be easier to discern than psychological factors. A predisposition for risk-taking behaviour, for example, may not portray itself as obviously as someone struggling to meet their debt repayments. Less common psychological factors that contribute to fraudulent behaviour include personality disorders, malingering (feigning a mental disorder), pathological lying, impulse control disorders, and stress-related disorders. Albrecht et al. published “Deterring Fraud: The Internal Auditor’s Perspective” in which the authors suggested that the reason psychological factors are so difficult to predict and determine is because no reliable psychological profile of fraud perpetrators exists.
Finally, an avenue not fully ventilated is that of an employee’s attitude towards his employer or the company. Some fraudsters who operate in the workplace rarely harbour any loyalty or feelings of goodwill, and are usually functioning on vindictiveness, by acting out of spite or retaliating to a perceived wrongdoing against them. Ultimately, it would appear that a misguided sense of retribution and desperation are the two most influential motivations for committing fraud in the workplace.
All the components thus discussed are still not enough to convince a potential fraudster to act on his impulses, however. If he lacks the opportunity to do so or is not in the position to get away with the crime, then more likely than not, the fraudulent act will not be committed. These “opportunities” are to be analysed in Part 3 of the series to follow.
Contact your local Moore firm here.
1This aspect will be explored in Part 4 of the article series.