'Fraudster Tales' Book Review: Swindlers' list and fraud triangles

Financial frauds or white-collar crimes have increased and become more sophisticated in today’s digital age but they are certainly not a recent phenomenon. History is replete with scams and frauds resulting in billions of dollars of losses suffered by investors as well as economies.

Wherever there is big money up for grabs, there are always individuals ready to play dirty by getting their hands on them. Nothing deters fraudsters; not the stringent rules and regulations, not even the fear that they could get caught.

Over the decades, authors and journalists have written books — both fiction and non-fiction — documenting white-collar crimes, corporate frauds, scandals, hoaxes and what have you. Now comes another book but this is old wine in a new bottle.

Finance professional turned crime writer Vijay Narayan Govind’s Fraudster Tales is about 10 famous or rather infamous financial scandals over the centuries. The book’s cover proclaims that these are “history’s greatest financial criminals and their catastrophic crimes.” That’s debatable because there are greater and worse financial criminals than those chosen by the author.

However, the book has some captivating stories of the past, covering a wide gamut of crimes. They are all true stories, researched extensively (there’s a detailed bibliography) and concisely written, and are a mix of police procedurals, thrillers and whodunnits.

 ‘Hegestratos, The First Fraudster’ dates back to 300 BCE. This Greek shipping merchant attempted to con the insurers of a shipload of valuable goods by sinking the ship but keeping the cargo, and claiming the loss anyway. The plan failed, thanks to an alert crew. Hegestratos jumped overboard and drowned himself to save face. His partner in crime, Zenosthemis, faced the law’s wrath in the courts.

From that first recorded fraud to one from the 21st century — ‘Chia Teck Leng : The King of Gamblers’. The well-educated Singaporean was sentenced to 42 years in prison in 2004, in what was then the largest case of commercial fraud in that country. As finance manager at Asia Pacific Breweries, he forged documents to swindle $117 million from banks to feed his gambling addiction.

In between, there are tales of Hugh Cameron, the crafty and power-hungry banker whose fraudulent activities led to the collapse of the Royal British Bank in the mid-1800s; of William Chaloner in the 1600s, an expert at making counterfeit coins, notes and lottery tickets and the most audacious con of the 1920s, the Oscar Hartzell and the Sir Francis Drake estate scam where the former swindled millions of dollars from investors.

A must-read for historical crime fans is the yarn of Jeanne de Valois, the French noblewoman who executed the ‘diamond necklace hoax’ involving Queen Marie Antoinette, one of the many scandals that led to the French Revolution.

Two Indians figure in the book. One is the Haridas Mundhra Affair, the first big financial scandal of independent India that exposed the nexus between the bureaucracy, stock market speculators and small rogue businessmen. It rocked the Parliament bringing to light the rifts between the then prime minister Jawaharlal Nehru and his son-in-law Feroze Gandhi. The scandal led to the resignation of the then finance minister T T Krishnamachari.

The other is the story of the notorious conman Natwarlal (real name, Mithilesh Kumar), known for his high-profile crimes and prison escapes and who famously posed as a government official and allegedly tried selling the Taj Mahal, the Red Fort, and the Rashtrapati Bhavan several times to foreigners.

US energy major Enron’s bankruptcy is still green in our minds and the saga of its chairman Kenneth Lay’s heavy involvement in the company’s accounting scandal also figures in the book.

Can any list of the biggest frauds be complete without the nefarious Ponzi scheme? The author rounds off his fraudster tales with Charles Ponzi, the con artist known for his investment scam. When the eponymous scheme finally blew up, investors lost nearly $10 million. 

What’s astonishing is that these white-collar criminals came from respectable families, received a good education and were ambitious until they gained some power and promptly began abusing it. As the author notes, in all such cases, “apart from the perceived pressure and opportunity to commit fraud, there was a tendency to rationalise the act, completing the recognised concept of the fraud triangle.”