What Is Economic Criminality?
The difficulties in dealing with economic criminality begin straight away when we attempt to find a blanket definition for it. No one has yet been able to do so satisfactorily: “Although economic criminality and the combating thereof is one of the most pressing issues of the present day, its definition and the definition of what constitutes an economic crime remains one of the unsolved problems…” Astonishing though that may seem, it is indeed the case.
At the AuditFactory, we have used our experience to develop a working definition that can be successfully applied in the practice of combating economic criminality: Economic criminality encompasses all crimes that are committed within, against and by business enterprises. While this includes crimes committed by employees, it is important to realize that employee criminality is only one facet of economic criminality.
A definition as broad as this encompasses all kinds of illegality with which companies and internal auditors may be confronted. Illegalities that need to be prevented, identified and acted upon (by means of forensic audits) and from which, with the help of expert consultation, the organization will be able to learn valuable lessons for the future.
Here are some examples to illustrate the spectrum of fraudulent activities with which we are faced – from simple employee theft to balance sheet manipulation:
- Employee infidelity
- Tampering with data
- Computer sabotage
- Industrial espionage
- Data theft
- Falsification of documents
- Forgery of probative data
- Concealment and destruction of documents
- Commercial corruption
- Collusive tendering
- Tax evasion
- Insider crime
- Money laundering
- Accounting and balance sheet manipulation
Recently, there has been a marked increase in the number of cases of industrial espionage and product piracy as well as corruption related offenses. It is a sad fact that public acceptance of this kind of criminality seems to be quite high. Economic criminals tend not to be regarded in their true light, namely as individuals or organizations that damage business and the economy as a whole. Economic criminality is an interdisciplinary problem that cannot be reduced to a simple matter of dishonest book keeping. Dealing with it nearly always requires a high degree of legal and business management expertise.
Offence rates vary, as do the ways in which offenses are committed; no two cases are the same. This is one of the reasons why any attempts to use fixed systems for preventing or detecting economic crime will almost certainly be doomed to failure. There is no substitute here for experience. Economic criminality is complex and dynamic; combating it is a job for experienced experts.