Advancing technology has created more opportunities for fraud. Computer use leaves everyone vulnerable to fraud, Including telemarketing fraud, Identity theft, and health care scams. What Is Economic Crime? Economic Crimes can be defined as the intentional use of deceit to deprive another of money, property or a legal right. Economic crimes fall broadly into the categories of those illegal actions under-taken by perpetrators to make money for themselves or those illegal actions undertaken principally to further the aims of their company or other organizations.
Types and scope of Economic Fraud: Economic Crimes can be of various types and nature. It varies from individual to organizational level. Most commonly observed in our daily life are as follows: Serial I Crime Type I Brief Description Asset Misappropriation I Include the misuse or theft of assets belonging to a company Bank Fraud I Act to defraud a bank of funds I 3. | Bribery I Anything of value Is offered/accepted with Intent to Influence decisions/octagons of the taker IP Infringements I someone copies or imitate items without any authorization.
But no organization is immune from this phenomenon. Fig 2: Economic Crimes reported by sectors Motives behind an Economic Crime: There can be various factors which influence a well educated person into crime. Money/profit is the key motive behind the crime, being committed individual level or an organizational level. Also, within an organization when legitimate or conventional avenues make the attainment of a goal difficult or impossible, many of us, whether as individual or as corporate actors, will resort to illegitimate or deviant avenues.
Fraud motive are defined in ‘Fraud Triangle’, which often point to three factors, need of an incentive or pressure to engage in misconduct, opportunity to commit fraud and ability to rationalize or Justify their actions. The Main Players: Economic Crimes are committed by people at every level and in practically every department. One survey suggests that ‘Figureheads’ within a business are responsible for 25% of all reported frauds. Most fraudsters tend to be risk-takers, decisive, extroverted, career- or success-oriented individuals.
Paradoxically, it is precisely these traits that are also highly prized in management recruitment. Today’s manager needs to possess a high degree of creativity and flexibility, qualities which an be successfully employed both appropriately and inappropriately. The Victims: The Government is a major victim of many forms of economic crime, which indirectly affects all citizens. Examples include Tax evasion and frauds by public servants. Organizations may also be a victims of frauds and are particularly vulnerable to offences involving the financial or technical expertise of employees.
Investors and savors are also most vulnerable to financial frauds and other offences such as ‘MIS- selling. But it’s the general public which will suffer the most, ultimately. Some Famous Examples of Economic Crime: Enron: revealed in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. Wrought the use of accounting loopholes, special purpose entities, and poor financial reporting, were able to hide billions in debt from failed deals and projects. Enron’s stock price, which hit a high of IIS$90 per share in mid-2000, caused shareholders to lose nearly $11 billion when it plummeted to less than Dye ten Ana AT November z Leaping communications, CEO, Rural was sentenced to fifteen years in federal prison. Riggs was convicted last July of fraud and conspiracy charges relating to $50 million in cash advances and $252 million more in margin loans. L.
Dennis Kowalski, the former CEO of Tycoon, and Mark Swartz, his main lieutenant. Both of them were convicted by a Manhattan Jury Just three days earlier on charges relating to the theft of $1 50 million and the covert sale of stock worth nearly $500 million more. The Tycoon convictions (twenty-two counts each) cap a three-year investigation involving two trials, nearly ten months of testimony and overall weeks of Jury deliberations. World CEO Bernard Beers, who was convicted of engineering an unprecedented $11 billion fraud. Astray Scandal: Economic Crime & Pakistan: Pakistan is not an exemption to the horizon of economic crimes.
The concept and the term of Economic Crime is, nonetheless comparatively new in Pakistan as compared to other developed countries. But crimes at individual levels (frauds, forgery, banking loans, kickbacks, bribery) are very common. Corporate crime terminology is, however, a new horizon in Pakistan. Not much cases of corporate crimes are so far reported. Scarcity of reported corporate crimes is not due to honest trading or fair game play. Rather, lack of expertise on the side of investigators and Political influence are main factors for non-reporting of Corporate Crimes.
As the result of growing economy, multi-national culture and globalization impact on Pakistan, there are much more requirements to indigenously cope with the globally increasing trend of Economic Crimes. Preemptive measures are needed to cope with the economic crimes trend rather than planning after it got roots in our economy. Some very familiar Economic Crimes which come up in our recent history are Cooperative scandal, Finance Companies, SEEM scams, Land Mafia, Housing Schemes, AKA Pride, Tax Company, kickbacks in defense deals.
Legislation in Pakistan: A lot of efforts have already been put through on legislation in recent past. But still lot of work needs to be done. Legislation is ever evolving process especially for the sectors which are continuously growing and new trends and techniques are continuously applied like the case of Economic Crimes. Some highlights of the legislative work done in Pakistan are as follows: Anti Money Laundering Act 2010 The Act mainly applies on different types of currency transactions which exceed amount specified by National Executive Committee.