Why Corporate World Is Rocked By Scams?

The corporate sector “may appear quite beautiful, with wonderful commercials and fantastic accomplishments, but there is an underbelly of scams and frauds,” feels Robin Banerjee, President & CEO, Caprihans India.

Speaking at the Gurugram chapter of the Indian Business Literature Festival on Wednesday, Banerjee dwelt on the reasons why fraudsters commit crimes. “Greed is the major factor,” he said.

“An opportunity to commit fraud, an ulterior mindset to do a crime, and peer pressure are other motivating factors,” he added.

The acronym “GROUP” explains this phenomenon well, he said, and explained, “It’s all about Greed, Rationalisation, Opportunity, Ulterior Mindset, Peer Pressure”.

Banerjee’s recent book, “Corporate Frauds: Bigger, Broader, Bolder,” talks about 350 instances of corporate fraud. He said that the Kingfisher Airlines fraud case changed everything for the corporate and financial world.

He mentioned on the rationale for writing such a book. He quoted, “I write books on negative topics. Around seven years ago, I discovered that many of the profits listed on balance sheets were incorrect. You conduct business, take loans, and invest in stocks based on that, and you’d be shocked to know that how many of them are false. The fraud committed against us on our accounts is merely a portion of the overall fraud. Nobody writes about failures; most stories are about successes”.

Elaborating on phantom capital, he said that India receives a lot of FDI, but the vast majority of investments in the world are based on phantoms.

“Most of these investments happen in the stock market,” he added.

He emphasised by saying, “Whenever you see investments taking place, take it with a pinch of salt, try to figure out where the money comes from. Unfortunately, there is no technology to track it”. 

To a question posed by Vishal Talwar, Director, IMT Ghaziabad, Banerjee said that cryptocurrency is not a currency, as it is not universally accepted. It has no stable value and does not have a demand-supply interaction. 

He also claimed that about 90 per cent of the cryptocurrency is used for terrorism, drug trading, and arms dealing. He added, “It’s the biggest technology fraud."

He stated that frauds can’t be eliminated, but only reduced. The only way to reduce fraud in the corporate world is by ‘naming and shaming'.

“We have heard of corporate frauds, but how many people have been caught? Of late, India has done a fairly good job in naming and shaming (fraudsters)," Banerjee concluded.