Analytical aspects of Corporate Frauds in India

However, the loss from fraud far exceeds the loss from robbery. Fraud is an intentional deception or a wilful misrepresentation of a material fact and includes lying, cheating, and stealing. Fraud as per Oxford Dictionary, a fraud is the use of a false representation to gain an unjust advantage and criminal deception. In the broadest sense of the term, a fraud can encompass any crime for personal gain that uses deception as its principal modus operandi. Of the three ways to illegally relieve a victim of money-force,
trickery or larceny, all the offences that employ trickery amount to a fraud. Thus, deception is the linchpin of any fraud.Under the common law, the general elements that must be present in a fraud are: (1) It is a misrepresentation of a material fact,(2) It is made knowingly and deliberately,(3) It is made with the intent to deceive,(4) It relies on the misrepresentation by the victim, (5) It results in injury or damage to the victim.

INGREDIENTS OF FRAUD

Donalt Cressey, the famous criminologist, developed the concept of ‘fraud triangle’, citing the three elements of the triangle as: (1) motivation (pressure), (2) opportunity, and (3) rationalisation. He described motivation as a non-shared financial problem, opportunity due to lack of internal control, and rationalisation as the ability of a person to rationalise his behaviour.