July 17, 2003

Erum Ahmed gives an insight into the concept, motives and repercussions of this crime

What is fraud? It is deception, criminal in nature, as dishonesty always is, whether it’s looked at from the perspective of the legal system of a country or religious commandments; whether it’s about rules in a family or the regulations of an organization.

The meaning of ‘fraud’ — before we attempt to understand its grounds and answer the “What, Why, How, “Who and When” questions — is also that fraud is a misrepresentation of facts to gain an unfair advantage. It is about making claims and not fulfilling what is expected based on one’s obligations.

And no, fraud is not just about corporations, institutions and governments. Fraud is about us individuals caught up in the rat race, all the time trying to be superior (not that this is wrong), but also crushing each other in the process because we deem it necessary at times.

When a cat kills a rabbit because it needs food, it is not labeled as fraud. But humans, the head of the creatures of God, is at least predicted to do better than animals. What else are our brains for?

I am not surprised to know that on February 15, 2001, Dawn reported that the World Bank’s Corruption and Fraud Investigation Unit was to arrive in Pakistan to investigate suspected $400 million embezzlement in the Social Action Programme.

Of course, misappropriation is an old story for us, regardless of whether we point fingers at the right person or not — not to overlook the moral implications of slander we don’t remember at all times. It’s asked: Where’s the proof? We don’t provide it unless we ourselves have been the victims of fraud.

One of our favorite discussions is about our electoral polls being fraudulent. Rigging, we call it. In fact, almost all of our leaders are accused of cheating to ‘buy their seats’ to the top of the ladder.

The same way, President General Pervez Musharraf was laid blame on by the human rights groups that said people were allowed to vote several times during the referendum and voters were coerced at the time. Musharraf, bound by destiny to be our leader, anyway came to power. Another old story just to show us how much trust we place in our newly elected leaders.

Fraud and theft are punishable with imprisonment and/or fines, under the Pakistan Penal Code. Ferrier Hodgson, a Hong Kong-based financial advisory service specializing in the areas of corporate recovery, corporate finance and reconstruction and litigation support, also in the Asia-Pacific region, has reported on Pakistan that these laws are fairly effective when the cases are successfully pursued and not made the subject of political pressure.

In addition, the advisory notes that hard fraud is protected in Pakistan by political influence whereas soft fraud does not attract serious penalties. As a matter of fact, soft fraud is about you and me, our lives and the misconduct we suffer at the hands of thick-skinned employers, educational institutions, etc.

Yes, soft fraud is about our ordinary day-to-day lives: when you hear your father talk of someone not paying him in business; when taxes are cut far more than they should have been; when your impressionable teen brother buys chaliya because it looks good on television being consumed by fashionable people; or when your university doesn’t give you your transcript for a year, saying that it just won’t. Will you fight this ridicule or will you stay hushed? It sure will cost a lot to fight. Why not just let it go? In effect, this is what we do — we forgive and forget soft fraud — but we tell each other, we warn each other and whine.

Here are some real life examples of soft fraud: Jalil was sent to jail in America because he signed his teacher’s name on a recommendation form. Ali became an illegal immigrant in America and was imprisoned and David M. Birdsey has been complaining on the Internet that he bought a supposedly antique Persian carpet in Peshawar, despite the fact that it was Chinese and not as old as it was said to be.

What’s more, in Birdsey’s experience as in others’ lives, the people who indulge unreservedly in fraud, when confronted, are rather meek; nonetheless, they do not change their weird ways when told they were wrong to begin with.

The Australian Institute of Criminology published The Psychology of Fraud. According to it, fraud or any other crime can be explained by three factors: “a supply of motivated offenders, the availability of suitable targets and the absence of capable guardians-control systems or someone to ‘mind the store,’ so to speak.”

This is about hard and soft fraud, both. Not just an employer against employee, employee against employer, individual against individual, individual against group, Internet fraud, insurance fraud or any other.

In the psychology of fraud, first the motivation of an individual is identified; this takes into account his personality and the situation he finds himself in. The psychological factors in question are honesty and integrity. Personality tests have been used abroad for recruitment to sift the truthful from the untruthful. How unbeaten are these? The reply is doubtful.

We all know that the individual who commits fraud (because fraud always starts with an individual alone) must be under financial strain. The description of financial stress is ambiguous because no matter how much we possess, humans are prone to always want more and more an unwavering attitude.

Also, a deceitful individual feeling strapped for cash is looking for shortcuts. The most humiliating motivation (for us) he has is that he likes to squash people by being devious toward them, and thus feeling dominant. Con artists like to fool others, simple as that. This is referred to as ego-challenge whereby meeting and overcoming challenges is not secondary to fraud offenses. Easy money and uncomplicated victory give pride to crooks that use rationalization or neutralization in order to evade the realization that they committed crime. A swindler would make excuses and often blame his victim for being misled. This he does to avoid any ethical responsibility he feels within himself.

When a double dealer — who is the principal or a senior officer of an organization — commits fraud against his organization, in psychological terms, he could be diagnosed as one with a narcissistic personality characterized by over-ambition, impatience with criticism and the belief that one is ultimately unique and chosen as absolutely super-ordinate.

This individual may have loyal followers who supply him with reassurance about his personality, that is also marked by a lack of empathy for others, and an undying need for ‘undue’ admiration. As an example, a wealthy American convicted of tax evasion stated, “Only the little people pay taxes.”

To explain fraud against organizations by employees or clients, The Psychology of Fraud puts forward two cases. The first is that of a disgruntled employee — dissatisfied justifiably or not so — who seeks retribution. The second case is that of an employee who begins to assert his ownership of the property of the organization.

This is where the tenant who refuses to leave your home comes in. He believes in terms of ‘my house,’ ‘my budget,’ and ‘my office.’ These beliefs or moral justifications account for the pilfering and much larger abuses that organizations undergo.

As maintained by the Australian Institute of Criminology, fraud committed by one individual against another in the context of face-to-face interaction involves “utter ruthlessness.” This form of dupery may happen anywhere, between friends and among family members as well. The deadbeat father is an instance of this, so is an orphaned woman abused in her relationships with men. For both the child and the orphaned woman, the issue of guardianship makes them down-to-earth preys.

Those who affront others in this way are known to lack affection, empathy, remorse and conventional conscience. They are known to be good at acting, something useful in personal encounters with their targets. Additionally, sociability and salesmanship are helpful to the phony. This individual may be suffering from antisocial personality disorder.

Researchers have found that this kind of person may score very high on measures of psychopathology. He may hurt others’ feelings but be rather detached in normal relationships. In actual fact, he may have a strong need for intimate interpersonal betrayal.

Moreover, he may be amoral, impulsive and uncontrolled, requiring personal gain of money, sex or supremacy. This person too may use neutralization or intellectualization to present superficial reasons for his behavior. Again, the dupe may be held responsible for being victimized, or an arrogant indifference may be shown with regards to how the victim was ill-treated.

Finally, The Psychology of Fraud discusses fraud committed against a number of people through print or electronic media. This is about mail fraud, telemarketing fraud and the latest email and Internet fraud.

It has been found that this “indirect fraud” is more easily indulged in by individuals in whom the influence of social norms is reduced, as are the constraints on their behavior, when the distance is great between the impostor and the target.

The psychology of fraud is a vast discipline in itself. Much is desired to be said in this regard; in spite of this, it is clear already that the personalities, motivations and situations that lead to trickery may vary considerably.

Besides, those who are narcissistic or those who are sociable and have superiority over others, may also use their traits in perfectly legitimate and desirable ways. The same is true for many other personality factors mentioned here.

It is valid to say that although we may now be in a position to answer all the questions about fraud, we are not yet entirely insulated from hard and soft fraud. This is because of the cost of legal pursuit in our country, and the carelessness we imagine is common among our higher-ups.

After all, we were the ones to say, our leaders — presidents and prime ministers — found their way to the top through insincere means. We’re distrustful of our leaders although we’ve not been given the right to judge in circumstances that are completely unrelated to us, where we weren’t the ones counting the votes ourselves, or watching them being manipulated illicitly.

Here’s what I propose: the next time somebody upsets me with fraud, I will merely comprehend his motives and why I was an unproblematic quarry for him. Other than that, I will know that the cost of litigation will be greater than the cost of injury I suffered. Therefore, I would like to forgive and forget but be wary in future of being connected with the same individual or organization. Does that sound fair?

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