Book Review: Robin Banerjee,Who Cheats and How? Scams,Fraud and the Dark Side of the Corporate World

Robin Banerjee’s book aims to discuss scams, frauds and dark side of the corporate world. The book, Who Cheats and How? Scams, Fraud and The Dark Side of The Corporate World, covers many kinds of cheating and frauds that are taking place in business world globally. In fact, the book interestingly captures the idea of fraud in one line, ‘Fraud is a high growth business and recession-proof’ (p. xxii).

The book in its nine chapters, has tried to examine the fraud, scam and corruption in the government and corporate. Interestingly, Robin Banerjee attempts to answer why people cheat. To explicate this claim, the book presents several appropriate examples from corporate world and provides useful facts on how scams and fraud affect stakeholders. Particularly, the book focuses on Indian corporates and government-owned public sector enterprises. Cases on scandals involving Union Carbide, Satyam Computer, 2G spectrums, Coal blocks, GMR-led Delhi Airports, LIC Housing, Bharat Earth Movers Ltd. etc. are adequately given space to illustrate situations pertaining frauds and scandals.

One of the major questions in the book is What is fraud? The author defines fraud as ‘a short cut to success. Some people are so ambitious that they want to win by hook or by crook. Some simply cheat because others are doing so. Some people cheat because they feel no one is watching. However, not everyone cheats’ (p. xvi). Moreover, the book refers to the famous study on fraud, conducted by KPMG in 2011, which summarises that ‘a typical fraudster is usually a male between 36 and 45 years old who commits fraud against his employer, works in a finance related role, holds a senior management position, has been employed by the company for more than 10 years and works in collusion with another perpetrator’ (p. xxv). This finding, and author’s own analysis, has been used to derive the fact that corporate professionals use their position in the organisation to plan fraudulent acts.

Why all champions are not cheats, all judges are not corrupt, all teachers are not partial and not all financing schemes are re-meditated. But a few are? The book links this problem to the unequal distribution of wealth. Unless the concerns of reasonable sharing of wealth are proactively addressed, the world may continue to face immoral practices. Frauds and scams damage companies’ overall reputation and hamper their brand value. The boards and top management of big corporates are usually hawk-eyed on surplus fulfillment aims and it is common in all for profit organisations. On the other hand, the technological developments have made fraudsters happier. By using technology, fraudsters have made matters much more complex and challenging for a common man. In fact, the nuances of frauds are also seen in so-called great investment options in start-ups, making stories as if they are all potential unicorns of the future. This makes it very clear that fraud is generally a top-down phenomenon.

Further, the concept note in the book on ‘Fraud and Scams: Modes and Style’ extends the topic by asking: who a typical fraudster is and which fraud is common? A survey by Ernst & Young, cited in the book says:

around 40% of companies do not even have simple mechanisms to put in place supplier databases, a worrying sign, since these are easy to install and help ensure that only bona fide third parties provide organizations with services. Companies’ apparent lack of knowledge about the third parties they deal with, is a serious risk for them. (p. xxxi)

This raises concerns about third parties, as companies generally do not have control on them; so it can be said that ‘the third parties are risky’ (p. xxxi) in terms of their services and processes.

Chapters 1–3 discuss the facts and cases on greedy corporates, miss-selling by banking and Ponzi schemes. Book highlights three types of lies: lies, damn lies and statistics, that are being used by corporations to justify deals mixed with falsification, falsehood and fiction. The book underscores this idea by sharing instances of medical chicanery, where drugs made in developed countries are usually sold globally, even though a few of these may be dubious in their effect on humans.

The focus on insider trading, cybercrimes and accounting ways of cheating issues have been discussed in Chapters 4–6. The book points that today Chinese companies listed abroad often have dubious structure known and a variable-interest entity, and without exploring the facts investors from other nations invest in those assets. The accounting, that is known for language of business is bizarre where real figures are hidden to report another, costs are misrepresented. Hence, the authors conclude, ‘rarely it is a one big fraud, but often a matter of a small falsification here or an inflated profit there’ (p. 186).

Another aspect of the book covers: Why do people, who are seemingly doing well in the corporate world, cheat? Who should be blamed for this sorry state of affairs? This has been highlighted in the GMR case of Delhi Airport where the CAG criticised that the government had violated the provisions of the airport development agreement for the benefit of the concessionaire on several occasions. It is clear that there may have been a nexus between GMR and politicians, which enabled the former to secure favourable terms. The auditor pointed its finger to this in the report and asked the government to locate the culprit. All fraudulent practices have their own style and book says, ‘top management, who masterminded the unlawful activity, generally get away rather lightly’ (p. 10) and this is the fact in every case of this kind.

Chapter 7 argues that checkers could be cheaters. Issues like conflict of interest, misreporting of profits, bogus expense claims and overstated sales are among others where auditors make ups and downs. It is always found hiccups in the role of auditors and there are numerous instances where they have fought for proper financial reporting and good governance. Chapter 8 raises questions on role of doctors in the society. In fact, there are several instances where drug-makers teach doctors to prescribe their medicines. Certainly this act neither suits society nor patient. Finally, the author summarises the book by quoting some media highlighted scams like Sharda Group and Sahara among others from rest of the world. Corruption and dishonesty seem prevalent around the world and it is only the degree that varies.

In sum, Robin Banerjee achieves his objective of creating awareness on frauds and scams in public as well as corporate worlds. The book does not make a scholarly contribution but is a good journalistic account on fraud. However, this book contains a useful compilation of cases and examples on various unethical practices and frauds, which are detrimental to corporate and business culture. Further, several interesting anecdotes pertaining to the topic make this book interesting. Overall, the book is a referable material for a whistleblower, who aims to empower truthfulness in the system.