This document discusses theories of minimum and maximum collusion in the context of corporate fraud. It defines collusion as an agreement between two or more people to commit a dishonest act. There are two types of collusion: minimum collusion provides necessary opportunities, resources or skills to commit fraud, while maximum collusion aims to share benefits of low-skill frauds among many people. The nature and level of collusion varies depending on the type of fraud and skills required, ranging from passive awareness to committed participation in the fraud.

1. THEORIES OF MINIMUM AND
MAXIMUM COLLUSION
A CORPORATE FRAUD CONTEXT
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2. COLLUSION, WHICH CAN BE DEFINED AS AN AGREEMENT BETWEEN TWO OR MORE PEOPLE TO COMMIT A
DISHONEST ACT, IS A FACTOR IN MANY FRAUDS AND FAR MORE COMMON THAT MOST HONEST PEOPLE SUSPECT.
IT USUALLY OCCURS UNDER TWO DISTINCT CIRCUMSTANCES( SEE DIAGRAM BELOW):
1. TO PROVIDE THE NECESSARY OPPORTUNITIES , RESOURCES OR SKILLS TO COMMIT A FRAUD: MINIMUM
COLLUSION
2. TO SHARE THE BENEFITS OF LOW-SKILL FRAUDS AMONG THE MAXIMUM NUMBER OF PEOPLE MAXIMUM
COLLUSION
OPPORTUNITIES FOR FRUAD ARE ALWAYS EXTENDED BY COLLUSION, BUT IT TAKES PLACE IN DIFFERENT WAYS AND
IN TWO DISTINCT CATEGORIES
HIGH
SKILLSLEVELS
COLLUSION LIMITED TO THAT NECESSARY TO
ACHIEVE FRAUD
MAXIMUM COLLUSION TO BUY
SILENCELOW
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3. LEVELS OF COLLUSION
A FRAUDSTER WHO WISHES TO SECURE SOMEONE ELSE’S COOPERATION WILL ENSURE THAT HIS APPROACH DOES NOT EXPOSE
HIM. HE MAY JOKE ABOUT THE POSSIBILITIES OF FRAUD, DISCUSS REVENGE FOR SHARED INJUSTICE OR LEAD INTO THE DISCUSSION
IN SUCH A WAY THAT, IF THE OTHER PERSONS REPORTS HIM, HE HAS A PLAUSIBLE EXCUSE. A CLEVER FRAUDSTER LOOKING FOR A
CONSPIRATOR IS NOT IN JEOPARDY.
HOWEVER, THERE ARE DIFFEENT LEVELS AT WHICH A FRAUDSTER MAY NEED COLLUSION (SEE TABLE BELOW). MOST FRAUDS
SUCCEED BY PASSOVE COLLUSION OR NEGLIGENCE. THIS MEANS THAT ALL ORGANISATIONS MUST HAVE A SYSTEM THROUGH
WHICH SUSPICIONS CAN BE REPORTED ANONYMOUSLY.
THE NATURE OF COLLUSION ALSO VARIES DEPENDING ON THE TYPE OF FRAUD CONCERNED
LEVEL OF COLLUSION CIRCUMSTANCES
PASSIVE A PERSON NOT INVOLVED IN A FRAUD BECOMES AWARE OF IT BUT SAYS
NOTHING
NEGLIGENT A PERSON RECOGNISES THAT HIS FAIURE HAS ALLOWED A FRAUD TO TAKE
PLACE
SUPPORTIVE A PERSON KNOWS ABOUT THE FRUAD IN HIS AREA OF RESPONSIBILITY BUT
CONDONES IT
COMMITTED A PERSON ACTIVELY PARTICIPATES IN THE FRAUD
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4. HIGH AND LOW SKILL COLLUSION
SPECIALIST SKILLS MIGHT BE REQUIRED TO COMMIT A PARTICULAR FRAUD OR TO
OBTAIN ACCESS TO PREMSIES OR RECORDS. COLLUSION OF THIS TYPE USUALLY
APPLIES TO HIGH-LEVEL MANIPUALTIVE FRAUDS AND WILL BE LIMITED TO PEOPLE
ABSOLUTELY NECESSARY FOR SUCCESS.
AT THE OTHER END OF THE SCALE, FRAUDS INVOLVING LOW SKILL LEVELS ARE
OFTEN INGRAINED. IN THESE CASES, COLLUSION TAKES PLACE TO THE GREATEST
EXTENT POSSIBLE POSIBLE AND CORRUPTS THE WHOLE WORKFORCE. THIS REDUCES
THE RISKS OF THE FRUADSTERS GIVING INFORMATION ON ANOTHER.
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5. CONCLUSIONS
CORPORATE FRUAD RESULTS FROM A COMBINATION OF MOTIVATIONAL AND
SITUATIONAL FACTORS IN WHICH THE CRITICAL POINT IS THE PRESENCE OF AN
OPPORTUNITY AND A MOTIVATION (SEE NEXT SLIDE).
IT FOLLOWS THAT IF OPPORTUNITIES CAN BE DENIED, EITHER BY PREVENTIVE
CONTROLS OR THE OBVIOUS THREAT OF DETECTION, ONE PART OF THE EQUATION
IS REMOVED. CHANGING THE MOTIVATION OF FRAUDSTERS IS AN ENTIRELY
DIFFERENT MATTERS, ALTHOUGH RISKS ARE SIGNIFICANTLY REDUCED WHEN THE
ORGANISATION FOLLOWS THE HIGHEST ETHCIAL STANDARDS AND ENSURES THAT
EVERYONE CONNECTED WITH IT COMPLIES WITH THEM.
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6. ACCESS
SKILL
TIME
GREED
ESCAPE
OPPORTUNITY
MOTIVATION
FRAUD
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