$165m ATO Scam: When the byline becomes the main story


The story of the week has to be the massive $165m tax fraud involving the son and daughter of senior ATO employee Michael Cranston, who are facing charges of fraud.

As details emerge regarding the extent of the scam, the cash and assets seized (including 2 planes can you believe it???) the scam itself is now no longer the main story.

The main story now centres around Michael Cranston himself, the ATO’s Deputy Commissioner, following him being charged with abusing his position as a public official for allegedly trying to access confidential information of an ATO audit into his son, Adam. To read more about the story click here

The Australian Federal Police (AFP) have been quick to say that there is no suggestion that Michael Cranston was involved in the $165m scam, or that he had any knowledge of it. That may be true. Whether that remains the case as the investigation continues and more information is uncovered I guess only time will tell, but this incident serves as a reminder to all of us.

A reminder about the importance of remaining vigilant within your organisation when it comes to fraud, corruption and integrity. Even the most mature and robust organisations face incidents of fraud, corruption and impropriety – it’s just a fact of life and a part of doing business. Protecting your reputation, your people and your bottom line is not a fixed target. Successful organisations continually assess, monitor and strengthen their internal policies, processes and education to minimise the incidence and impact fraud and integrity issues can have on them.

It’s also a reminder of what can happen to even the most honest and trusted person when the right set of circumstances collide. When it comes to fraud and white collar crime, we often talk about the Fraud Triangle, a theory developed by Donald Cressey in the early 1970’s, where Cressey theorised that for an ‘ordinary person’ to commit fraud three factors needed to be present:

  1. Pressure – this is what motivates the person to commit fraud or an integrity breach. They have an unshareable pressure or situation that they can’t resolve legitimately.
  2. Opportunity – person has access to information, systems or money by virtue of their role and breach the trust placed in them by the organisation, their peers and society.
  3. Rationalisation – the person doesn’t see themselves as a criminal or a bad person, but rather someone caught in a predicament or a short-term crisis. They rationalise their behaviour to justify to themselves their actions – “I will pay the money backnext week…”

I am not sure what constitutes an ‘ordinary person’ these days but I think Cressey was saying those of us that aren’t career criminals.

No matter how high your position, how experienced you are, how much training you receive during your career, we need to keep in mind that everybody is susceptible to committing fraud and corruption. Yes, everybody.

Given the right set of circumstances we are all susceptible to being compromised. Some reading this might say “rubbish, I would never do something like that!” And I hope you are right. What is probably more accurate is that you have never had to consider doing something improper because you haven’t had a pressure in your life so great that you couldn’t share it with others due to embarrassment and couldn’t seek advice or assistance to resolve it. You haven’t felt trapped with no way out.

We don’t know why Michael Cranston did what he did, if he in fact did what is being alleged of him and if so, what factors existed that might explain his actions. Like all of us, he deserves the presumption of innocence as this matter plays out.

But the lesson here is that organisations can never rest on their laurels. Protecting your organisation is not a set destination, it’s an ongoing journey. Top organisations know this and continuously invest in strengthening their policies, assessing their risks, tightening their internal controls and educating their people. Risks change over time, so too should your organisation.

I feel for the good folks who work at the ATO right now. I’ve dealt with a few of them during my various roles over the years and I know first hand the organisation is solid and is committed to being ethical and stamping out tax fraud.

The ATO employs approximately 20,000 people across Australia. This week we are talking about three of their employees. Spare a thought for the other 20,000 or so who do the right thing, come to work everyday and give their all but because of the actions of a small few they are all being tarnished this week.

Written by Darren Murphy

Integrity expert with a passion for helping organisations protect their people, reputations and bottom line.

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