R

ecently, the Corruption Eradication Commission (KPK) arrested two suspects, father and son, in the alleged Koran procurement fraud. The father, Zulkarnaen Djabar, is a member of the House of Representatives, while his son, Dendy Prasetya, is the director of PT Karya Sinergi Alam Indonesia, the company that won the procurement project.

The original budget for the project had been set at Rp 22.8 billion (US$2.4 million) in 2011 but was multiplied to Rp 110 billion ($11 million) in 2012. According to the KPK chairman, Zulkarnaen had allegedly influenced the selection of his son’s company as the tender winner of the procurement project.

The case has drawn much public attention as it concerns the holy book of the majority of the Indonesian population. The public also deem this case as one of many that involve those who are supposed to be “good guys”, or people who know much about religious teachings like Zulkarnaen, a member of the House’s Commission VIII overseeing religious affairs.

The phenomenon of “good guys turn bad” is not unique to Indonesia. In fact, the Association of Certified Fraud Examiners (ACFE) found in its 2012 global fraud survey that almost 90 percent of fraud offenders do not have prior criminal records, which suggests that in the past they might have been honest people.

Experts have long been trying to shed some light on this behavioral change. Over half a decade ago, for example, criminologist Donald Cressey formulated what is now known as the Fraud Triangle, which says that fraud occurs due to pressure, motivation, opportunity and rationalization.

Many experts believe that the primary factors behind one’s motivation to commit fraud are money, ideology, coercion and ego. The “coercion” factor implies that some people turn into fraudsters simply because they are forced to do so by, among others, their corrupt superiors. Evidence suggests that a corrupt system in the workplace may coerce an honest man to turn into a fraudster.

In the cases of Enron, WorldCom and other high profile bankruptcies due to fraud, for example, accounting staff were often forced to follow orders to assist their superiors in manipulating financial statements. The Indonesian Religious Affairs Ministry, according to the Indonesian Forum for Budget Transparency (FITRA), is considered one of the most corrupt public institutions in Indonesia.

Opportunity is the most visible factor that can tempt an honest man to commit fraud. A common form of fraud opportunity is one’s job, which grants him or her power over other individuals. Lord Acton once said that “power tends to corrupt and absolute power corrupts absolutely”. This is why we need sound control in an organization to ensure that no one will abuse their power and that no one can hold too much power to abuse.

Rationalization is believed by many experts as the most intriguing factor behind any fraudulent act. The ability of fraud offenders to rationalize their offences is often associated with their high intellect, which sets them apart from the likes of “traditional” thieves. In other words, not only that they are able to deceive others, they are also able to deceive themselves into thinking that they are not doing anything wrong.

Rationalization is particularly important for a fraudster at the beginning of his “criminal career” in order to make himself feel good about what he has done and not see himself as a criminal.

However, as he perpetrates more fraud, the efforts and energy needed by a fraudster to justify his acts diminishes to the point where he no longer needs to rationalize his crime and feels no guilt at all. Experts believe that this is where an “accidental fraudster” turns into a “predator fraudster”.

Studies also reveal that a fraudster’s ability to justify his offence does not come instantaneously as it is a lifelong process, which starts from as early as his childhood years. Cheating at school or university, for example, is seen by many experts as an early indication that fraud rationalization is beginning to build up in a person’s mind.

Although pressure, motivation, opportunity and rationalization exist in most if not all fraud offences, we simply cannot say that anyone with exposure to such factors will always end up being a fraudster. The fact is that there are people who have spent most of their life being in a corrupt environment but never succumb to the temptation of being part of it. Here, the big question is how do people decide to be a fraudster or not?

Behavioral scientists argue it has something to do with the cost–benefit consideration of doing so. For example, in Indonesia, many believe that the legal consequences of committing corruption are considered light compared to the financial benefits thereof and thus many educated people choose to engage in corrupt acts since, at least in their mind, the net pay-off is bigger than not doing so.

The “cost” in this equation may also include the feeling of guilt for breaking, among other things, religious tenets regarding sinful conduct, which appear to be unable to outweigh the pleasure of enjoying illegal gain from fraud.

This signifies the importance of education in shaping one’s integrity so that when faced with a choice of whether or not to commit fraud, obedience to religious tenets, moral values and ethical codes will outweigh any unlawful gains.

The writer is director of the Center for Forensic Accounting Studies at the Accounting Program of the Islamic University of Indonesia. He obtained his Master’s and PhD in forensic accounting from the University of Wollongong, Australia.