White-collar crime rides roughshod over trust
Golf is one of the most difficult games in the world. I’m told it’s because the ball is at rest before you hit it. Whatever. There are nonetheless 60-million people in the world who play golf regularly. I can think of a number of reasons why, but it’s mainly because the worst player can play the best shot and the handicap system allows players of all standards to compete as equals.
Cheating in golf is easy but self-defeating. If you cheat, you record a lower number of shots and a higher score (to win that sponsored prize in a corporate golf day?). Trouble is, the lower the scores you keep handing in, the lower your handicap becomes, the harder it is to win (and the more you have to cheat) because your actual and recorded skills start to diverge.
Stealing money is a little more complicated and those charged with its oversight need to be vigilant. If it is your chosen role in society to be the guardian of rules, to be the overseer, to be the gatekeeper, to be the watchdog, then you cannot be found sleeping on the job. You cannot even doze off occasionally. You have to watch, you have to know. Silence is complicity.
It is virtually impossible to open a newspaper or a Twitter page nowadays without reading about the latest scheme for cheating, all in the name of that lowest of all, least enduring, power denominator: money.
Despite the obvious diminishing marginal utility of money, everyone wants more of it, and those who get more of it by ill-gotten gains want more of it the most. To protect the innocent, it has become necessary to develop rules of behaviour in the world of money, rules that bear legal consequence if they’re broken and have bodies of oversight and megabytes of reporting, to define and defeat misconduct, across the globe.
In the financial world, these are primarily auditors and banks, governed by institutions such as the Independent Regulatory Board of Auditors, central banks and courts of law. At issue is not only what you do in these roles, but what you don’t do, what you turn a blind eye to.
The people I know in the oversight industry — the auditors, bankers and regulators — are, by the very peer selection of themselves, straightforward, borderline boring, law-abiding, nice people — polite, as it turns out, to a fault. But recently, they have been found wanting. Oversight has had just too many oversights for them to be regarded as acceptable errors.
Some crooks have found their way into the mix.
Perhaps it’s just easier to press “enter” than it is to pull a trigger, but the effect is the same and the numbers are getting bigger. Crooks are stealing money from the system and the system is the trusted repository of the savings of the people.
The real problem isn’t just about the money. It is the trust and influence and power that are being peddled.
The categories of cheating haven’t changed much — money laundering and illegal participation in financial flows as well as insider trading.
How do we manage it better? Systematic solutions, absence of ambiguity, zero tolerance and unbearable consequence.
Almost all cases of financial fraud involve complicity. A “higher-up” authority in a bank instructs an eager reporting manager to ignore a systemsgenerated alert. “Don’t worry, we know about those transfers.” Damn right they do! You can’t have system limits capable of human overrides — what’s the point? Exceptions need to be accurately illuminated, publicly reported and considered by higher-level groups of people, not individuals, to mitigate the risks of cover-up and individual economic participation.
Insider trading is insider trading and anyone who does it knows damn well what they’re doing. Trading on information certain to you but not in the market and unknown to your counterparty is nothing short of theft. The price, time and volume of any transaction in the financial markets is accurately recorded, such is the nature of contracts governing the transfer of money. We can track and trace all of these, and the same information that validates them as firm deals can confirm the guilt of the participants.
Once proved, there can be no tolerance, no discretion and no exceptions. The punishment must fit the crime and cannot be measured in money; they’ll steal some more to pay the fine.
Money buys many freedoms. If you steal it, then removing those can be the only currency of reprieve.
ONCE PROVED, THERE CAN BE NO TOLERANCE AND NO EXCEPTIONS. THE PUNISHMENT MUST FIT THE CRIME