Corporate Frauds

WHAT IS CORPORATE FRAUD?

The term refers to activities or actions executed by a company or an individual in an illegal manner to project false image of a company, for professional/personal benefits.

The corporate culture has taken the country by storm, changing the work methodologies and lifestyle of individuals and professionals alike. Corporates have provided strong thrust to the society as a whole, by generating job opportunities and changing the working trend and outlook in many respects.

However, every positive development has a negative aspect as well. Intrusion of corporate culture has also created rooms for frauds, which eventually impact the overall structure of any organization. Some of these frauds are listed below:

  • STEALING INFORMATION

Mostly, employees are responsible for leaking crucial trade secrets of an organization to outsiders, for monetary benefits.

  • ACCOUNTING FRAUDS

Intricate manipulations are done in accounts in such a manner that they go untraceable and the defaulter is able to divert huge volume of money to his account, without getting noticed.

  • MISAPPROPRIATION OF ASSETS

The term refers to theft of tangible assets of an organization.

  • CORRUPTION

Common examples of corruption practiced in corporates include receiving kickbacks or bribes, giving bribes to public/private officials, aiding in frauds being committed by others etc.

Monetary benefit is the most common motive behind these frauds. However, there are other factors which may lead to committing such frauds. These may include:

  • A general perception that the said fraud is being done by everyone
  • This is a common practice in the line of business
  • Taking revenge with the management
  • Frauds are also done to bring the company out from a tough situation
  • INTELLECTUAL PROPERTY RIGHTS FRAUD

The term refers to trademark counterfeit, a practice wherein the brand power of a popular brand is utilized in unlawful manner to increase sales of one’s products or services.

  • CORPORATE FRAUDS – THE PREVENTIVE MEASURES

Every hole in a boat needs to be plugged at the right time, to prevent it from sinking… the same rule applies for frauds committed in a corporate environment. Adhering to simple methods of effective management can save catastrophical damages to an organization, some are listed below:

Design policies and non-disclosure agreements and ensure adherence by members of staff

Creation of an ethical environment which discourages unlawful activities in the organization

Inducing reliable internal controls in the organization

Installing cameras etc to capture unlawful activities

Train staff on ethics, fraud prevention techniques, internal controls

Conduct thorough background checks when hiring new employees

Corporates in India have grown up to play a crucial role in our society, thus shaping and re-defining our work culture and lifestyle as a whole. Nurturing the culture in a positive direction is more important, than making a ground for practicing unlawful activities.

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