Skip to main content

Fraud with a different motive

Last month (December 2018), Tesco hit the headlines as two of its executives were acquitted of any fraud charges in relation to the firm’s 2014 accounting fraud scandal.

The multinational retailer had been accused of false accounting when it was discovered that its profits had been overstated by £250m in 2014 – reporting that some payments had been brought forward up to five years in advance to meet profit targets as sales fell. The announcement saw Tesco’s share value fall by £1.5bn in just one day[i].

The 2014 accounting scandal highlights an alternative motive for fraud:  when people are under stress to perform rather than for personal gain.

A vigilante

The primary duty of any business director is to manage a company in the interest of its shareholders.

In many public, or indeed private companies, the need to appease shareholders is not only to show a return on their investments but also to demonstrate the directors and senior management are doing a good job.

As a result of this, accounting fraud, such as the Tesco case, sometimes occurs not for personal gain but to draw a veil over poor performance and preserve jobs in the hopes of a later upturn in profits.


Pressure of performance is a significant driver of fraud – be it internal or external.

Directors of blue-chip companies such as Tesco are under pressure to maintain and increase shareholder profits. They need to demonstrate good quality work leading to a desired increase in profitability.

The pressure to perform to the targets set or desired can lead to senior teams posting flattering financial results.

Artificially inflating results is frequently rationalised in the perpetrator employee’s mind for noble reasons.  They are trying to preserve their colleagues’ jobs and maintain the company’s reputation as regards performance.

Add pressure to perform with rationalisation of noble motives and you can see how decent people can succumb to the intense pressure of performance and do the wrong thing.

Until an individual is in a situation where they are gripped by the fear of failure to perform or at risk of loss of their livelihood, there is no way of knowing how they may react. The majority whilst clearly finding such a situation very difficult to deal with may accept the inevitable such a loss of their job.

However, history shows there are others who, if pressed, disenchanted or in need to feed their lifestyle, would act dishonestly if presented with the opportunity.

This scenario as to why a person may commit fraud has its own term:  the fraud triangle[i].

The three components of the fraud triangle:  pressure, rationalisation and opportunity – combine to create an increased risk of insider fraud happening.

Understanding why fraud may occur is a key factor in preventing it –focus on policies and procedures alone is not the answer.  It is just as important to know your people and, as a leader in an organisation, reflect on how much pressure they are placed under. These are only a few of the points to consider.

At Tenet, we strive to achieve wider and more bespoke ways of tackling the risk of insider fraud. If you’re unsure how you can protect your business, please get in touch.

Published on January 24, 2019

Contact details

Phone: 0121 796 4020


Fax: 0843 216 4240


Tenet Compliance & Litigation Limited
Sterling House, 71 Francis Road, Edgbaston, Birmingham B16 8SP


Copyright © Tenet Law. All Rights Reserved.

Tenet Compliance & Litigation Limited. Registered Office, Sterling House, 71 Francis Road, Edgbaston, Birmingham B16 8SP. Registered in England and Wales. Registered No: 09776405. Authorised and regulated by the Solicitors Regulation Authority. SRA Identification No. 626562.

Created by Gritt & Co