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Pawns, Patrons, and Patsies
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violations of company policy, and raising issues about “questionable”
interpersonal behavior, some could not influence management decisions
regarding the well-established fraudster. Without top management
support, organizational police are often unable to uncover and
handle the corporate psychopath’s subcriminal behavior.
Corporate Fraud in the Boardroom
PricewaterhouseCoopers (PWC) reported that in 2003, 37 percent
of 3,600 companies in 50 countries had suffered from fraudulent
acts, with an average company loss of more that $2 million.
The actual average loss likely was much higher because of failures
to detect or report frauds, or a tendency to write them off as
a commercial loss. One quarter of the frauds were committed by
senior managers and executives with a sophisticated understanding
of the company’s internal controls and risk management procedures.
In spite of the public outrage at the recent spate of high-profile
scandals in the corporate world, things are not getting any better.
In 2004, the percentage of companies in the PWC global survey
that experienced fraud rose from 37 to 44 and then to 45 in 2005.
PWC suggests that corporations should be on the watch for
the executive who:
• Engages in activities indicative of a lack of integrity
• Is prone to engage in speculative ventures or accept unusually
high business risks
• Displays a poor attitude toward compliance with regulatory or
legislative obligations
• Is evasive, uncooperative, or abusive of the audit team
• Lacks a proven track record