Corporate Fraud Handbook: Prevention and Detection, 4th Edition

CHAPTER 14

Occupational Fraud and Abuse: The Big Picture

DEFINING “ABUSIVE CONDUCT”

The cases we have seen on the preceding pages were, by and large, on the extreme edge of abusive conduct by employees. In short, this data is merely the tip of the iceberg. How deep and massive that iceberg is varies from one organization to another, depending on a complex set of business and human factors.

The depth of the iceberg is also measured by what is defined as abusive conduct. Obviously, the more rules within the organization, the more likely employees are to run afoul of them. Remember from Chapter 1, Hollinger and Clark’s study revealed that almost nine out of ten employees admitted to abusive conduct at some level.1 Part of that abuse is owing to the diverse nature of individuals. Tom R. Tyler, in his book Why People Obey the Law, concluded that individuals obey only those laws that they believe in.2 If a rule makes no sense to the employees, they will make their own rule.

Let me illustrate the point with another personal experience from the FBI. The FBI did a thorough background investigation before hiring me, notwithstanding the Mr. Zac debacle. They investigate each and every agent prospect. When you are hired, it does not mean you are perfect—just that the bureau has put you through every wringer it can think of, looking for any imperfection that may surface to disqualify you.

Of those who survive that process, only a tiny percentage actually are hired and put through training ...