Intelligent, pleasing and hard-working too

Employers beware. Long serving employees in organisations need not necessarily be loyal.

According to a global study by KPMG, a typical corporate fraudster is male, holding a senior management position, and in the age group of 36 to 45. He works in connivance with another perpetrator and has spent more than 10 years in the finance or finance-related function of a company.

“Fraudsters possess a sharp intellect, a pleasing personality and are adroit at exploiting any loopholes in processes or laxity in colleagues,” says a PSU banker who has served in the anti-fraud department.

Experts, none of whom was willing to go on record, say that fraudsters work late, rarely take leave, are abnormally hard working and pretend to be overly sincere.

“They shower unwarranted attention on fellow colleagues (from whom they extract classified information such as passwords) and ensure that the colleague drops his guard and parts with information,” says the banker.

Greed for a quick buck or simply the kick of having achieved something near impossible is what motivates a fraudster, say experts.

A sudden change in lifestyle not commensurate with the person's known sources of income is a sure-shot indicator, they say . “Perpetrators succumb to such acts due to peer pressure (on materialistic lifestyle) and growing social disparity thanks to different compensation structures (such as highly valued ESOPs) in different industries,” says the CEO of a mutual fund.

Experts say that technology cannot be a panacea to this problem unless adequate controls are built in while designing the system architecture. Technology has brought down the number of steps in a process and also the number of people required and hence it has become easy for the tech savvy to commit a fraud. Fraudsters are capable of setting faulty system alerts that tend to mislead other people.

“Front office and back office interface in Indian broking firms is usually not automated using straight through processing as it is costly,” says an IT risk expert.

“Though top managements are willing to invest in functionality of technology there is no incentive to invest in control aspects. Whereas better functionality helps in generating more business, better control only costs more,” he says.

“Frauds can be minimised only if there is a clear mandate on control from the top management,” says the IT risk expert.

Things are improving especially in the BFSI business with more and more companies asking their risk management officers to verify and countersign transactions, say experts.

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