Frauds Un­earthed

India Business Journal - - READERS' LOUNGE -

Fi­nan­cial crime seems hor­ri­bly com­pli­cated, but there are only so many ways that you can con some­one out of what's theirs. In fact, there are four. A vet­eran reg­u­la­tory econ­o­mist and mar­ket an­a­lyst, Dan Davies, has years of ex­pe­ri­ence pick­ing the bones out of some of the most fa­mous frauds of the mod­ern age. Now, he re­veals the big pic­ture that emerges from their labyrinths of de­ceit.

The LI­BOR scan­dal is well known where re­spectable bankers gave low quo­ta­tions in the polling process as the idea was to trick the mar­ket into be­liev­ing that the banks were strong. If they had pro­vided the right rates, which were ac­tu­ally higher, then the preva­lent fear psy­chosis would have taken over, given the deep sus­pi­cions that were har­boured against banks post-fi­nan­cial cri­sis. Bar­clays was the big name that was in­volved in this fraud.

Start­ing from this ex­am­ple, Mr Davies goes across var­i­ous kinds of frauds that have been per­pe­trated, right from rais­ing money for cen­tral banks of coun­tries that never ex­isted to the more well-known cases of Ponzi or Mad­off. His be­lief is that fraud­sters play on the weak­nesses in the sys­tem of checks and bal­ances and the au­dit pro­cesses that are meant to sup­ple­ment the en­vi­ron­ment of trust. And it is hard to catch these peo­ple be­cause crooked busi­ness­men em­ploy the ser­vices of crooked au­di­tors, ac­coun­tants, lawyers and even bankers so that there is a strong cir­cle of fraud­u­lent par­ties in the ring, which is hard to dis­lodge, ar­gues the au­thor.

Along the way you will find out how to fake a gold mine with a wed­ding ring, a file and a shot­gun. You will see how close Charles Ponzi, the king of pyra­mid schemes, came to ac­quir­ing his own pri­vate navy. You will learn how fraud has shaped the en­tire de­vel­op­ment of the mod­ern world econ­omy. And you will dis­cover whether you have what it takes to be a white-col­lar crim­i­nal mas­ter­mind, if that is what you want.

About the au­thor

Dan Davies is a for­mer reg­u­la­tory econ­o­mist of the Bank of Eng­land and an­a­lyst for a num­ber of in­vest­ment banks. His ca­reer has seen him tackle all man­ner of fi­nan­cial crooked­ness, in­clud­ing the LI­BOR and FX scan­dals, the col­lapse of An­glo Irish Bank and the Swiss Nazi gold scan­dal.

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