Two Separate Discussions
Locate the video titled Paying “Tolls” Leads to FCPA Violation on the ACFE website at https://www.acfe.com/vid.aspx?id=4294992902 and post your comments identifying the elements you believe are present from the fraud triangle. Do you think this happens often in companies? What do you think would have prevented this fraud from happening? Discuss your ideas with at least 1 other classmate.
From the video where Richard Bistrong talked about the situation which made him convicted fraudster I identify two elements of fraud triangle: (1) opportunity, and (2) rationalization.
Paying bribes becomes a normal practice in the business for corrupt vendors and even government. When corruption becomes commonplace in a public institution, “it will also become a rationalization for its members to engage in corrupt acts, because evidence suggests that higher levels of exposure to corruption in daily life may promote tolerance and an acceptance of corruption that is reflected in norms of behavior” (Hendi, 2014, p. 36).
Besides rationalization, an opportunity arises where there are poor workplace conditions such as absent or weak internal control. An opportunity becomes even more attractive to the fraudster when there is a low probability of being caught. Many fraudsters think that bribes are not really serious, especially if it can happen in other countries where it can be, unfortunately, common practice. With Mr. Bistrong it started with a head nod.
There was no pressure from the company to get the contract by any price, they would even tell him, as Mr. Bistrong said, to leave everything and come back just not to be involved in illegitimate scheme.
I do think it happens in many companies worldwide. I can tell about Russia where corruption is at a high level. The worst thing is that the corruption is in the government and law enforcement. And in many cases, it turns from fraud to crime. The very commonplace for a bribe is tenders where the companies try to win contracts in the industry. As a former banker, I had the clients – companies that participated in tenders. The bank of this client used to take the role of guarantee for the client during the tender. For some companies was too hard even to get there for participation not even to win anything. Corruption has a bad influence on the economy as a whole.
The fraud occurred, as I mention, in a poor workplace condition such as weak internal control. Maintaining internal control procedures, monitoring technique, and anti-fraud training can reduce the possibilities of fraud occurrence.
Hendi, Y. P. (2014). To be corrupt or not to be corrupt. Journal of Money Laundering Control, 17(3), 306-326. doi:http://dx.doi.org/10.1108/JMLC-11-2013-