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2020 Journal of Financial Crime
This paper aims to critically examine the modern slavery statements of Anglo American Plc. and Marks and Spencer Group Plc. to determine the level of effectiveness of the risk assessment and risk mitigation measures of both companies and provide recommendations on how the risk assessment and risk mitigation measures of both companies could be strengthened.Design/methodology/approachThe analysis took the form of a desk study, which analysed various documents and reports such as the UK Modern Slavery Act 2015, the UK Modern Slavery Act 2015 (Transparency in Supply Chains) Regulations 2015, the UK Guidance issued under Section 54(9) of the Modern Slavery Act 2015, the 2018 Global Slavery Index, funded by Forrest’s Walk Free Foundation, the Anglo American Plc. Modern Slavery Statement of 2017/18, the Marks and Spencer Modern Slavery Statement of 2017/18, the Financial Action Task Force Guidance on the Risk Based Approach to Combating Money Laundering and Terrorist Financing (High Level Principles and Procedures) 2007, the Financial Action Task Force International Standards On Combating Money Laundering and the Financing of Terrorism and Proliferation (The FATF Recommendations) 2012, the Australia Anti-Money Laundering and Counter-Terrorism Financing Rules Instrument 2007 (No. 1) (as amended), the Financial Transactions and Reports Analysis Centre of Canada Guidance on the risk-based approach to combatting money laundering and terrorist financing 2017 and the Central Bank of Nigeria (Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations, 2013.FindingsThis paper determined that the standard due diligence measures and the enhanced due diligence measures of Anglo American Plc. are not effective enough to identify/assess the risk(s) of modern slavery in the supply chains reason being that Anglo American Plc. does not use diverse methods/methodologies for her due diligence programme. This paper, however, determined that the standard due diligence measures and the enhanced due diligence measures of Marks and Spencer Group Plc. are effective enough to identify/assess the risk(s) of modern slavery in the supply chains because Marks and Spencer adopts diverse methods/methodologies for her due diligence programme. This paper also determined that both Anglo American Plc. and Marks and Spencer Group Plc. adopt diverse methods for the monitoring of their corrective action plans which are designed to mitigate the modern slavery risk(s) associated with high-risk suppliers. For example, Anglo American Plc. monitors anti-modern slavery compliance with the use of both internal Anglo American teams and third-party auditors to ensure that the identified issues are adequately addressed.Research limitations/implicationsThis paper focuses on Section 54 of the UK Modern Slavery Act 2015 and the Modern Slavery Statements of Anglo American Plc. and Marks and Spencer Group Plc for the year 2017/18.Originality/valueSeveral articles have been published on this topic. Among them, is an article by Stefan Gold, Alexander Trautrims and Zoe Trodd titled “Modern slavery challenges to supply chain management”, Supply Chain Management: An International Journal, Vol. 20 Issue: 5, pp.485-494 and an article by Stephen John New titled “Modern slavery and the supply chain: the limits of corporate social responsibility?”, Supply Chain Management: An International Journal, Vol. 20 Issue: 6, pp.697-707. The article by Stefan Gold, Alexander Trautrims and Zoe Trodd drew attention to the challenges modern slavery poses to supply chain management. Although the article briefly talked about the risk-based approach to monitoring supply chains for slavery, it did not discuss about the due diligence measures that UK firms are required to apply during risk identification and risk assessment, and the risk mitigation measures that will address the risk(s) that have been identified. The article by Stephen John New examines legal attempts to encourage supply chain transparency and the use of corporate social responsibility methods. Though the article mentions the UK Modern Slavery Act 2015, more attention was paid to the California Transparency in Supply Chains Act [S.B. 657], State of California, 2010), enacted in 2011 and in effect from 2012. The article analysed the California Act without critically discussing the risk assessment procedures for UK companies. In addition to discussing the different stages of the risk assessment/risk management process, this paper will examine the modern slavery statements of Anglo American Plc. and Marks and Spencer Group Plc. This paper will provide recommendations on how the risk assessment/risk mitigation measures of both companies could be strengthened. This is the only paper to adopt this kind of approach. The analysis/recommendations in this paper will help UK companies to design effective due diligence procedures for their supply chain.
2020 Journal of Financial Crime
The purpose of this study is to reconstruct the use of disposition variables as determinants of fraudulent behaviours. It is hoped, it stimulates our critical understanding of psychological aetiology on individual’s intention to perpetrate partial fraud or to co-offend.Design/methodology/approachThis study was developed as a reflection of empirical work conducted in Indonesia public sectors.FindingsBy suggesting the important process of individual’s cognitive reasoning, this study identifies that there is an overlooked process made by prior studies in terms of personality traits as a strong predictive power for individual’s intention to commit fraudulent behaviours or white-collar crimes. This study argues that they should not be independently predictive of fraud behaviours. This study acknowledges that in the prediction of social behaviours, whether fraudulent behaviours or not, there are no absolute answers to or analyses of it. However, it is instructive to consider social cognitive theory in elucidating the psychological pathways associated with fraudulent behaviours. This is because it can bridge an appropriate lens in positioning personalised behaviours as a predictor of perpetrating fraudulent behaviours. Then, this study does not have any serious concerns about how many antecedents influence behaviours of intention to perform wrongdoings. However, the functioning of individual cognitive reasoning should not be ignored. Both theoretical and managerial implications from this study are discussed to suggest alternative theories on causes of fraudulent behaviours.Practical implicationsThis study uses social cognitive theory as a basis of analysis. Through a simple analysis, a different perspective of treating the antecedents of fraud has been proposed, so that it can be used to develop more effective intervention that can deter fraudulent behaviours within an organisation.Originality/valueThis study theoretically explores psychological mechanisms or pathways related to the functioning of individual’s reasoning. Then, this study proposes the critiques, in which it is intended to stimulate another research on deepening and broadening a theory of fraud. In short, this study importantly also offers recommendations and opportunities for future research and organisations to develop effective prevention that can deter fraudulent behaviours.
Akomea-Frimpong, Isaac; Andoh, Charles
2020 Journal of Financial Crime
This study aims to assess the fraud cases, factors and control measures of financial fraud in the drug industry with evidence from Ghana. Drug industry and pharmaceutical are the same, and they are used interchangeably in this study.Design/methodology/approachData from questionnaires were collected from 412 manufacturers, wholesalers and retailers of the drug industry. Data were presented and analysed with descriptive statistics and probit regression.FindingsResults show that, in general, stealing of drugs, stealing of cash, usage of fake cheques, falsified documents and dubious accounting practices are some of the fraud cases in the industry. Factors such as gender, educational level, religious beliefs, regulatory 7measures, pressure, rationalization and opportunities influence financial fraud in the drug industry. Control measures such as thorough assessment of products, regular review of fraud policies, installation of fraud-detection software and effective internal systems could reduce the menace.Research limitations/implicationsThe paper addresses a number of theoretical and systemic issues on financial fraud in the drug industry but with limited specific quantitative data or calculations as well as limited sample size. Further studies could offer a more quantitative approach with a larger sample size in an attempt, for instance, to estimate the financial costs of financial fraud to the drug industry.Practical implicationsThis paper openly tackles various attempted frauds and financial malfeasances from stakeholder perspectives in the drug industry. Practical measures have been given to tackle the consequences of the menace.Originality/valueThis paper is geared towards providing valuable learning points for stakeholders in the drug industry to handle daily operations to assist them in detecting and preventing similar occurrence of financial fraud.
Alazzabi, Waled Younes E.; Mustafa, Hasri; Abdul Latiff, Ahmed Razman
2020 Journal of Financial Crime
PurposeThe purpose of this paper is to explore and provide insights into corruption and the control procedures from an Islamic perspective.Design/methodology/approachThis paper adopts qualitative research approach using the holy Quran as a primary source and hadith of the Prophet Mohammed supported by the anecdotes of his companions as a secondary source and prior literature.FindingsThis paper offers an Islamic taxonomy of corruption that contains economic, managerial, financial, political, environmental, social and ethical corruption which is explicitly prohibited because of their consequence on societies. Islam establishes proactive, preventive, detecting and reactive procedures to control corruption and prescribes how to avoid its harmful consequences. The paper also reveals significant concepts in relation to individuals’ qualities that if taken care of, better chances to reduce corruption and better living conditions can be accomplished.Research limitations/implicationsThe paper recommends means to the business community through providing managerial and practical procedures which can be used for limiting corruption effectively. However, this piece of work provides further explanations on corruption to improve our understanding on such a phenomenon and contributes to the literature from the perspective of Islam point of view.Originality/valueThe paper contributes to the debate on corruption, human, religion and control from an Islamic point of view, which is lacking. This paper finds evidence that loss of belief is a situational factor that leads to corrupt acts. Also, moral teaching in early ages is necessary for inner and self-control. Moral renovation is an influential factor that keeps individuals motivated and refrain from indulging into corrupt acts.
Baskaran, Shathees; Nedunselian, Nalini; Ng, Chun Howe; Mahadi, Nomahaza; Abdul Rasid, Siti Zaleha
2020 Journal of Financial Crime
This study aims to clarify the relationship between ethical orientation and earnings management perception phenomenon in the organization. It discusses to what extent earnings management is considered as a strategic adaptation or deliberate manipulation in an organization. The study also aims to expand the domain of ethical perspective of earnings management by considering mediating and moderating role of investor sentiment and corporate social responsibility (CSR) as inward pressure and outward commitment surrounding the organization, adopting a combined perspective of strategic management and also accounting discipline than is normally found in the ethics and earnings management literature.Design/methodology/approachThe study opted for literature synthesis to define key concepts surrounding ethics and earnings management perception in the organization. Besides, it attempted to identify influential mediators and moderators in explaining the earnings management phenomenon in the organization. Consequently, the study identified the gaps in current research to draw upon a more holistic conceptual framework. The rationale for the research was justified within the body of research.FindingsThe study suggested research propositions based on the literature synthesis in view of ethics and earnings management perception in the organization. More specifically, it has proposed a conceptual framework, explaining the relationship between ethical orientation and a multi-dimensional view of earnings management perception. It is envisaged that the mediating and moderating role of investor sentiment and CSR incorporated in this conceptual study will improve the predictive value of the proposed framework and offer additional insights about factors that inhibit or advance ethical orientation and earnings management practices in the organization.Research limitations/implicationsThis paper suffers from the obvious limitation of lacking empirical investigation. However, it does provide a theoretical rationale for the argument that alteration of earnings can be controlled if ethical orientation is emphasized in the organization apart from insulating internal and external pressures to manage such phenomenon from happening in the organization. Perhaps, the most important direction for future research is further extension and validation of this framework by performing an empirical investigation to produce newer insights into this phenomenon.Originality/valueThis conceptual study is different from previous studies on the grounds it has considered unexplored issues linking inward pressures and outward commitments in explaining this phenomenon further. To bridge the critical knowledge gap of earnings management phenomenon, a mediating effect of investor sentiment as an inward pressure and a moderating role of CSR as an outward commitment are also integrated within the model. The proposed model neither formulated nor tested empirically in previous studies locally or, perhaps, globally, therefore, stands out as an original contribution in the study of ethical orientation and earnings management perception.
Kadoya, Yoshihiko; Khan, Mostafa Saidur Rahim; Yamane, Tomomi
2020 Journal of Financial Crime
This study aims to examine the demographic, socio-economic and personality determinants of financial scams.Design/methodology/approachThis study uses data on scams collected in Hiroshima prefecture in Japan for the analysis and analyzes using the logit regression model.FindingsThe results show that the current level of financial dissatisfaction increases the probability of being a victim of a financial scam. No other demographic or socio-economic factor is related to incidents of financial scams. Using the “big five personality traits,” this study finds that lower conscientiousness is the only personality trait that increases the probability of being a victim of a financial scam.Research limitations/implicationsOverall, the results suggest that people with low conscientiousness could be easy targets of financial scams and financially dissatisfied people could engage in potentially risky and fraudulent projects.Originality/valueFinancial scams are a long-standing concern for Japan. Every year, an increasing number of financial scams are being reported, though there are very few empirical studies examining victims’ profiles and other determining factors.
Gupta, Chander Mohan; Kumar, Devesh
2020 Journal of Financial Crime
The purpose of this paper is to study the concept and procedure of creative accounting as how is it worked around and how it can lead to financial crimes. The procedure which are followed and which are the people who are involved and who are the victims of such crimes. The methods which are used to perform the action and how is it done. What are the findings of different researchers who have studied the same concept and how can it be curbed is the main purpose of the paper.Design/methodology/approachThis paper is designed to find out the working of accounting policies and how the loopholes in the same can actually be taken into account, resulting in a certain number games which can be played around it, and to get the desired outcome in the preparation of financial statements.FindingsCreative accounting, though legal and acceptable around the world, gives in the way to loopholes provided by the acts and rules governing the preparation of financial statements and eventually leading to financial crimes and hampering the economy as a whole.Research limitations/implicationsThe limitations of this study remain to the fact that it is an empirical study, as a lot of papers and articles were studied before giving it a shape and reaching a conclusion.Practical implicationsCreative accounting though not illegal but the excess use of the same has given daunting effects on the financial statements and as a result have resulted into financial frauds and looting of peoples money throughout the world.Social implicationsHard-earned money of the investors is looted and no action can be taken against as the mechanism and the legal bodies are still struggling to curb the problem, and thus it is very important to learn about creative accounting.Originality/valueThis study leads to the understanding of the growth of creative accounting and how it has resulted in accounting frauds leading to financial crimes in an economy.
Homer, Emily M.; Higgins , George E.
2020 Journal of Financial Crime
The purpose of this paper is to assess if federal judges have sentenced criminal corporations to fines that are consistent with the seriousness of the offense and the blameworthiness of the organization, which would be in line with the directives from the US Sentencing Guidelines. This paper will also use the focal concerns framework to measure organizational blameworthiness.Design/methodology/approachThis paper uses secondary data from federal sentencing documents, collected by the US Sentencing Commission, for cases that were adjudicated between October 1, 2010 and September 30, 2017.FindingsResults showed that the focal concerns framework can be used to define potential constructs for blameworthiness and that an organization’s culpability score was a significant predictor in whether the company received a higher fine.Research limitations/implicationsThe data are unable to examine two of the three measures of focal concerns. Cross-sectional data limits the ability to draw conclusions regarding cause and effect between blameworthiness and monetary fines.Practical implicationsResults imply that judges are sentencing corporations that have higher culpability scores to more severe fines, in accordance with both the federal Sentencing Guidelines and focal concerns framework.Originality/valueThis study is one of the first to apply the focal concerns framework, usually used to examine the sentencing of individuals, to the sentencing of corporations. It is also one of the first to attempt to empirically define blameworthiness.
Muhamad, Nurisyal; A. Gani, Norhaninah
2020 Journal of Financial Crime
In December 2013, the World Bank had declared that, in the developing world, corruption is the No.1 public enemy. True, Malaysia has been swayed by the endless corruption scandals from the upper classes to the subordinates, in public as well as private sectors. As a country that is moving towards being a developed country in 2025, the Malaysian Government has been working hard to overcome corruption through various plans and initiatives. Thus, the purpose of this paper is to highlight on Malaysia’s current initiatives and factors that had been found to be of significant importance by previous studies for combating corruption in Malaysia.Design/methodology/approachThis study employed structured review process as well as critically examined the contents to ensure that the data are filtered from high-quality peer-reviewed journals. Twenty-five quality papers were selected from top journals of various areas to produce the list.FindingsThis paper contributes to the existing literature by providing a comprehensive list of factors in Malaysia in the fight against corruption.Originality/valueThis study will be beneficial to academics, policymakers and anti-corruption professionals interested in Malaysia’s anti-corruption experiences.
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