Wherever a fraud occurs, three elements are always present:

  • opportunity;
  • a perceived pressure;
  • a way to rationalize the behavior;

This is not the place to extensively explain the fraud triangle but there was this article  in the Southland Times that illustrated how things may work out.

A woman was accused of using a two year old cancer victim to fraudulently obtain money. Charges included causing loss by deception, obtaining by deception and theft. She’s been running an appeal for the two year old leukemia patient and kept the proceeds. Her offending according to her own story started because she need money to feed her gambling habit. She claimed to be addicted to betting at the TAB and was placing bets around six times a day for amounts between $5 and $200. The lady in question was pointing at agents claiming to be more responsible in how they monitor punters’ behaviour. The NZ Racing Board does have a responsibility to take proactive measures tio minimise problem gambling and if we are to believe the lady such proactive measures had not been taken.

Perceived Pressures
Financial pressures are probably the most important when it comes to committing fraud. The fact that someone has always been honest appears to be of little to no significance when severe financial pressures exist or are perceived to exist. The six most common financial pressures associated with fraud that benefits the perpetrator are:

  • greed
  • lifestyle issues
  • high bills or debts
  • poor credit facilities
  • personal financial losses
  • unexpected financial needs

This list is not exhaustive and other financial pressures may be found. Furthermore these financial pressures are not mutually exclusive and several may exist at the same time. It is claimed that there is for instance a rise in employee fraud and thefts that relates to the current economic crisis. Pressures are up for many, those that lost their job may have severe pressures, that are still in a job may consider unethical means out of fear for losing their job. 

Closely related to financial pressures are vices: addictions like gambling, drugs and alcohol, and by now even the internet porn addictions.
The relationship is indirect in that it is not the vice itself that makes people commit fraud but the immediate need for cash to finance the habit. Vices are the worst kinds of pressure in that they drive people into an out of control lifestyle where they are immune to reason. This is why they are considered one of the worst kinds of pressures.

The lady pointed at the agents an even her family so as to notice behaviour and intervene. Apparently no-one had noticed the troubles the lady was in and an opportunity opened itself up where agents were, at least according to the lady, lax in relation to their monitoring of potential problem gamblers. Regardless of what the merits of such an argument are, one could just imagine how it may be important for an employer to notice behavioral changes that may indicate that something is wrong but most of all to ensure that there are no unnecessary opportunities to steal and get away with it. An employee with a vice could well become a fraud hazard. Would you recognize a problem employee?

We are more than happy to assist you and your employees for instance with a fraud risk assessment or fraud awareness training, a fraud risk management program, or where you suspect that something may be wrong; why not contact us. We would welcome the opportunity to assist you in getting to the bottom of your concerns and work towards a resolution.

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  1. I don’t know If I said it already but …I’m so glad I found this site…Keep up the good work I read a lot of blogs on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say GREAT blog. Thanks, 🙂

    A definite great read..Jim Bean

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