Lying for Money: How Legendary Frauds Reveal the Workings of Our World by Dan Davies

Author:Dan Davies
Language: eng
Format: mobi
ISBN: 1781259658
Publisher: Profile Books
Published: 2018-07-04T22:00:00+00:00

7

THE ECONOMICS OF FRAUD

‘I could not think of any man whose spirit was, or needed to be, more enlarged than the spirit of a genuine merchant. What a thing it is to see the order which prevails throughout his business! By means of this he can at any time survey the general whole, without needing to perplex himself in the details.’

J. W. von Goethe, Wilhelm Meister’s Apprenticeship

Imagine you are managing something – part of a business, an academic department, a government agency or something. Choose something you know a bit about. Now, imagine that you want to defraud someone else. In order to do that, you are going to need to tell some lies in order to gain something of value. What would you try to steal? What would you need to falsify? How would you do it? How would you keep the fraud going over time? How much money could you extract from the fraud?

Once you have written down the list of things you would need to do in order to turn your workplace into a successful fraud, sit down and have a look at it. Isn’t this a useful document? It shows you:

• What the key indicators are which show whether your business is doing well or badly.

• What a really good set of numbers (and maybe even non-numerical performance indicators) would look like.

• How growth and compound interest are expected to affect the legitimate business over time.

• What questions you should ask of a really good set of numbers to make sure that they reflect a good reality rather than someone manipulating them.

In other words, to understand how to defraud something is to understand how to manage it.

That’s potentially quite a useful mental exercise – if you’re ever in the position of taking over a new operation, or thrust into a consulting assignment, or just wanting to renew your understanding of something you’re in charge of, ‘thinking like a fraudster’ might be a way to generate new insights.* But there’s a somewhat more disconcerting aspect to this thought experiment, because it works the other way round too.

Which is to say, if you were to write down a summary of how you manage something, the things you look for and pay attention to, how you expect them to develop and what you check in order to make sure all is as it should be, then you would have the beginnings of a template to carry out a fraud on the same workplace. The information set is the same; to understand how to manage something is also to understand how to defraud it.

This might suggest a pessimistic conclusion – that anything which can be managed can be stolen from, and that precautions are useless because all manageable entities are equally vulnerable. That would be going too far. It’s also true that any lock made by a human can be picked by a human, and that the plans to design a lock are also the template for its vulnerabilities. But that doesn’t mean that locks are useless, or that all locks are equally vulnerable.

Download

Copyright Disclaimer:
This site does not store any files on its server. We only index and link to content provided by other sites. Please contact the content providers to delete copyright contents if any and email us, we'll remove relevant links or contents immediately.