There is a great article on the psychology of fraud written from a business perspective from The UK Guardian yesterday.  It stresses the importance of understanding this issue because “organisations in the US are estimated to lose around 5 per cent of revenues to fraud of various kinds, while in the UK in the first half of 2008, accountant KPMG recorded 128 cases of fraud with combined losses of £630m”.

The conventional explanation of fraudsters’ behaviour is that they are greedy and dishonest individuals whose activities are enabled by lazy supervision. The reality, however, is less simplistic; business psychologists believe that frauds come about because of a complex set of interactions between the personality of the fraudster and the environment in which they operate. Good governance won’t have any effect on the former, but it should on the latter.

Here is the kicker:

In an environment that encourages risk-taking, rapid innovation and the pushing of boundaries, the borderline between ethical and unethical activities can become blurred.

At the bottom of the article is a review of three famous financial fraudsters.

Meanwhile, as the effects of the financial crisis are being felt around the world, Transparency International’s 2008 Bribe Payers Index (BPI) exposes the degree to which companies of the leading exporting nations are likely to engage in bribery when doing business abroad.

First place in the 2008 BPI is shared by Belgium and Canada with a score of 8.8, signifying that Belgian and Canadian firms are the least likely to engage in bribery when doing business abroad. Netherlands and Switzerland occupy third place in the index, each with a score of 8.7. At the other end of the scale is Russia, coming in last with a score of 5.9, just trailing China (6.5), Mexico (6.6) and India (6.8).

I must confess that I take a pride in Canada being at the top. As a Canadian, living in Switzerland, I am perhaps not well suited to other cultural views on this issue.  My values may not, I should rephrase, are not shared by a large part of the world.  But who is right?  It appears that rampant bribery is about corruption and not good for business.

The announcement highlights fears that leading emerging economies are undermining international efforts to tackle corruption. Chinese, Indian and Russian companies bribe routinely to win overseas contracts. Ms Labelle said Transparency International’s research “provides evidence that a number of companies from major exporting countries still use bribery to win business abroad, despite awareness of its damaging impact on corporate reputations and ordinary communities.” (See FT.com article here.)

We are now most definitely living in a global economy.  It appears that while individual cultural differences and values will remain, a broader common denominator of dealing with international issues will be expected, demanded and required.  If only the western corporations could live up to these standards in the first place!