Fraud Risk: Correlation Between Bullying and Fraud

Bullying, overt or subtle, in the workplace causes resentment. If committed by managers and accommodated or unattended by the CEOs, or if deemed to be encouraged to climb the corporate ladder, it will eventually create a culture of survival-of-the-fittest. In this culture, the victims of bullying will feel powerless, insulted, and isolated. No one wants to feel vulnerable. These victims may damage their organization through asset misappropriation or corruption to compensate for this feeling of helplessness. To balance their sense of self-confidence, they might embark on sophisticated and costly schemes by breaching limits and bypassing controls to gain self-respect. Some theories state that Jerome Kerviel, the infamous fraudster of the Société Générale, was bullied and disrespected by traders in the trading room. Resentment is a solid rationalization to commit fraud that could bypass standard controls.