People Innovation Excellence

Fraud and other crimes – how to differentiate them?

Some authors (i.e. Ramamoorti, 2008) suggest that fraud is another example of anti-social behaviour. Ramamoorti (2008) categorised both as criminal behaviour and manifestations of human’ psychological problems. Ramamoorti’s (2008) work focuses on the motivations of fraud perpetrators from behavioural and psychological science standpoints. He notes the rationale for individuals who commit fraud is because of the contradictions between the triumphs and the human mind. So, individual with psychopath personality may infiltrate and wreak havoc on corporations (p. 529).

There is not sufficient evidence to suggest that mental disorder or psychopathic personality has a direct trigger of an individual’s decision to perpetrate fraud. Since it is, by its nature, difficult to be observed. Whether a person is psychopath or not, they must have been “trusted” to access organisational assets (Cressey, 1953) or/and have “capability” of how to identify the opportunity, how to exploit it, and how to get away without being detected (Wolfe and Hermanson, 2004). Importantly, Ajzen (1991), in his Theory of Planned Behaviour, notes that “[. . .] personality traits have an impact on specific behaviours only indirectly by influencing some of the factors that are more closely linked to the behaviour in question” (p. 181). So, the effect of dispositional factors, e.g. psychopathic personality on an individual’s intent to commit fraud, may be minor compared to various situational factors within the work environment. Situational factors are generally beyond the control of individuals, for example, managerial intervention.

We strongly argue that the logic in examining the relationship between psychopathic traits and the propensity to perform violent criminal cannot be used to explain the causal factors of fraud in the organisation. Thornton (1951) and Stone (2007) note that crimes perpetrated by a psychopathic person are viewed as either severe injury or death cases (e.g. murder, rape and felonious assault). Psychopaths tend to do premeditated crimes without calculated risks. The super-ego function in psychopath impedes any option for dealing with stressful situations and erodes moral and ethical sensibility (Thornton (1951). A core feature of psychopaths is a lack of empathy for other people or a lack of guilt for their acts and is often associated with repeated delinquencies (Glenn and Raine, 2009). Due to such psychological attributions, psychopathic individuals are unable to differentiate “what is right” and “what is wrong” based on the accepted social norms in organisations or communities.

Therefore, it is reasonable to argue that a set of salient dispositional factors are not a better predictor of fraudulent intentions. It is because it does not have a powerful influence over the individual’s intention. The basic premise of a fraud triangle theory is that people to commit fraud they must adapt to and create moral justification from their environment. At least, it is to avoid social and legal sanctions if their acts are being detected. Some researchers (Schuchter and Levi, 2015; Free, 2015; Cressey, 1953) argue that a psychological rationalisation or justification is vital for unanticipated future consequences, particularly in the field of fraudulent behaviour. It is a part of the foundation of human reasoning to calculate the difference between what is right and wrong. This discussion suggests some evidence that all criminal cases which are associated with a mental disorder, e.g. psychopathic traits, are less intellectual, or are denounced as predatory crimes or aggression. Thus, it becomes increasingly apparent at this point that trust violation or fraud is not be attributed to the concerns of mental disorder.

This note is extracted from article by Maulidi, A. and Ansell, J. (2021), “The conception of organisational fraud: the need for rejuvenation of fraud theory”, Journal of Financial Crime, Vol. 28 No. 3, pp. 784-796.


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