Corporate crime is here to stay

R Balakrishnan | Updated on January 22, 2018

Title: Who Cheats and How Author: Robin Banerjee Publisher: Sage ublicationsPrice: ₹475

A new book documenting some 500 instances of fraud in India shows just why this is so

Crime is of two kinds. Black collar crime includes everything from an attempt to rob your home to a gruesome murder. Black collar crime is pursued vigorously and punishment meted out and some of the crimes (in some nations) are punishable with death.

When it comes to white collar crimes, society is very indulgent. An ecosystem has been built that actually encourages white collar crime. Very few of these crimes are actually punished and when they are, the punishment is marginal. The criminal continues to be a full citizen of society and life goes on uninterrupted.

Reputation on the line

Who Cheats and How by Robin Banerjee is probably the first compendium of crimes committed by over 500 big corporations, that has been published in India.

Most of the cases covered and/or mentioned are of recent vintage and contemporary. Companies that feature in this book are fancied companies in the stock markets. Which brings us to the other side: In their pursuit of money, investors do not seem to care about sullied reputations.

Robin Banerjee is a chartered accountant, cost and management accountant, company secretary and postgraduate in commerce. He has worked in big corporations in India and overseas, such as Hindustan Unilever, Arcelor Mittal, Thomas Cook, Essar Steel, and Suzlon. He has also won awards, including the Business Today award for Best CFO. His qualifications and experience come through in the way he has stitched together a wide range of corporate shenanigans.

Covering one fraud in the space of 300 pages is a tough ask. The fact that the writer has managed to pack in brief summaries of nearly 500 frauds and scams is commendable. His understanding of the subject and the ability to communicate them crisply is a highlight of this book.

Telling it like it is

The author splits the ‘crimes’ into different sections: frauds done for personal enrichment, frauds done to please the capital markets and ensure personal enrichment through stock price movements, frauds that involve outright theft, falsification of books, and so on. The author has also included examples of product-related fraud such as the use of animal fats by McDonalds in french fries; Pfizer paying fines for illegal marketing of drugs; drug companies falsifying test reports; and so on.

Obviously, in 300 pages, it is not possible to document every fraud in every industry. The focus, therefore, is on financial frauds using accounting, capital markets and so on as the backdrop.

At one place, the author quotes a Russian proverb: “It is not for the stealing that you are punished, but for getting caught.” This is a telling comment on our legal system, where there is always a benefit of doubt factor before anyone is prosecuted.

The writer also has a section on big name accounting firms and some of their headline affairs in which they have been party to fraud. He makes the interesting observation that ‘analysis’ can expose financial or accounting frauds. I back him on this.

The spirit of wrongdoing

There is an interesting chapter after the introduction, titled ‘Fraud and Scams: Mode and Style’. Here, in four or five pages, a few characteristics of a typical fraudster, the rationale for fraud, whistle-blowing and so on are highlighted.

There is a chapter on cybercrime that should be of interest to everyone. From Facebook to Google, there is criminal intent behind invasion of privacy, data capture, etc. There are so many crimes that happen in broad daylight.

Unfortunately, they are not policed and even if a Google or FB is caught, what follows is merely a rap on the knuckles, while the fingers continue to dip into others’ pockets. Data theft, impersonation and other new frontiers in criminal intent are emerging. The internet is the domain from which entire cities can be shut down by hackers.

We all talk about privacy, but we do not even realise that the moment we log on (which is like 24/7 for many individuals), we are being robbed or our privacy is being compromised.

The writer also talks about the undying spirit of wrongdoing by corporate and corporate executives in their pursuit of Mammon. It is almost as if corporate social responsibility is the way of atonement for the corporate world!

Alas, if only they knew that “No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.” — Matthew 6:19–21, 24 (KJV)

Crime will stay

What I also liked about the book is that the writer does not pontificate or offer ‘solutions’. There is acceptance that corporate crime is here to stay. It only multiplies in size and numbers as the lure of the capital markets and the growth of technology make it easier to be one step ahead of the law.

The legal and creative brains are at the beck and call of crime-doers. The regulators are clearly short on resources.

This book is a welcome addition to my bookshelf. It can be read over time and you can dip into any page.

Since corporate theft appears to have taken root, maybe keeping a copy of this book in corporate cabins will keep your eyes open. And yes, sometimes, as the writer says, crime can even be concealment of today’s income in a metaphorical cookie jar.

Dip into it when there is a bad time. Is this criminal?

The reviewer is a financial consultant based in Chennai

Published on November 15, 2015

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