The Enemies Within Your Organization: Occupational Fraud In The Oil, Gas And Energy Sector

ASU Author/Contributor (non-ASU co-authors, if there are any, appear on document)
Dwayne McSwain PhD, Associate Professor (Creator)
Appalachian State University (ASU )
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Abstract: A headline like the following is definitely an attention grabber: "IRAN BILLIONAIRE SENTENCED TO DEATH IN OIL FUND FRAUD CASE." This headline is from a March 2016 story about billionaire Babak Zanjani and two other individuals receiving the death penalty in Iran after being found guilty of embezzling $2.7 billion from the state-run National Iranian Oil Co. (Motevalli & Nasseri 2016). Arrested in 2013, an Iranian court determined the three individuals committed this massive fraud while attempting to circumvent international sanctions on Iranian crude exports. All three individuals are obviously appealing both their convictions and sentences. Although the sheer size of this fraud (as well as the severity of the sentence) is eye-catching, the amount of fraud commonly committed by an organization’s own employees also should be quite alarming to companies within the oil, gas and energy sector. This fact is demonstrated by survey results gathered by Big 4 firm KPMG about the current climate of business integrity. Of those surveyed who are employed in the “energy & natural resources” industry, 74% stated they had “personally seen” or had “first-hand knowledge of” misconduct within their organizations over the prior 12-month period (KPMG 2013). A clear majority of these same survey respondents also recognized the severity of the misconduct, with 53% noting the misconduct could cause a “significant loss of public trust if discovered.” With such prevalence of misconduct, it should not be surprising that the Association of Certified Fraud Examiners (ACFE) reports approximately 5% of an organization’s revenues are annually lost to occupational fraud, with a worldwide cost of $3.7 trillion annually (ACFE 2016).

Additional Information

Daigle, R., McSwain, D., & Morris, P. (2016). The Enemies Within Your Organization: Occupational Fraud In the Oil, Gas and Energy Sector. Oil, Gas & Energy Quarterly, 2016, pages 889-898. NC Docks permission to re-print granted by author(s).
Language: English
Date: 2016
occupational fraud, oil, gas, and energy sector, business integrity

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