Corporate Fraud can involve a range of different activity. The perpetration of fraud can be quite complex, starting out as a small act, and continuing for months, maybe even years.
Ronald K. Noble, founder of RKN Global, notes that the participants involved in corporate fraud may not have intended to commit just a few “small” fraudulent acts, which later mushroomed into a criminal web spanning years.
While many people assume that corporate fraud involves the theft of particular funds, this is not always the case. Some types of fraud involve diverting funds from one account to another, altering payee information, and giving the appearance that some investments have increased in value of a short period of time.
Other incidences of corporate fraud can include stating that the value of a business is greater than it is. An example of this phenomenon involves two former Rio Tinto senior executives who have been charged with fraud in the United States. The charges came about as a result of the British-Australian mining company being accused of hiding its losses by inflating the value of coal assets.
The company purchased African assets in 2011 for approximately $3.7bn, before selling them in 2013 for $50m. The charges also saw the mining firm fined for breaching some disclosure rules regarding the purchase of African assets. The fine amounted to £27m, and Rio Tinto says that it will defend the charges that have been brought against the company.
Two Rio Tinto executives were charged after the United States District Court Southern District of New York found that they had misrepresented the value of the business. The court found that the two had stated that the mining company was worth more than $3bn when in reality the court found that the company was worth much less.