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How to get away with financial fraud
#1
Some places in the world are what they call “low-trust societies”. The political institutions are fragile and corrupt, business practices are dodgy, debts are rarely repaid and people rightly fear being ripped off on any transaction. In the “high-trust societies”, conversely, businesses are honest, laws are fair and consistently enforced, and the majority of people can go about their day in the knowledge that the overall level of integrity in economic life is very high. With that in mind, and given what we know about the following two countries, why is it that the Canadian financial sector is so fraud-ridden that Joe Queenan, writing in Forbes magazine in 1989, nicknamed Vancouver the “Scam Capital of the World”, while shipowners in Greece will regularly do multimillion-dollar deals on a handshake?

We might call this the “Canadian paradox”. There are different kinds of dishonesty in the world. The most profitable kind is commercial fraud, and commercial fraud is parasitical on the overall health of the business sector on which it preys. It is much more difficult to be a fraudster in a society in which people only do business with relatives, or where commerce is based on family networks going back centuries. It is much easier to carry out a securities fraud in a market where dishonesty is the rare exception rather than the everyday rule.

https://www.theguardian.com/news/2018/ju...cial-fraud
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#2
Interesting article. I would definitely trust a deal by handshake with a ship (er, make that boat) builder over any written contract with a bank. That holds true in Greece as well as Canada.
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#3
(06-29-2018, 10:41 AM)mason Wrote: Interesting article. I would definitely trust a deal by handshake with a ship (er, make that boat) builder over any written contract with a bank. That holds true in Greece as well as Canada.


Reminds me of a Foreign exchange student, from Belaruss I had working the summer for me a few years ago,


after a couple months I realized his checks were not clearing, I asked him
"aren't you depositing those into a bank?"
He burst out laughing and said "NO!! I don't want to lose my money - I save your paper checks ((ie he trusted a private small business more than any international bank)) and will cash them all on the way home".

later he said that US Cash worked out very well for him back home.
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#4
(06-29-2018, 03:09 PM)DaveGillie Wrote:
(06-29-2018, 10:41 AM)mason Wrote: Interesting article. I would definitely trust a deal by handshake with a ship (er, make that boat) builder over any written contract with a bank. That holds true in Greece as well as Canada.


Reminds me of a Foreign exchange student, from Belaruss I had working the summer for me a few years ago,


after a couple months I realized his checks were not clearing, I asked him
"aren't you depositing those into a bank?"
He burst out laughing and said "NO!! I don't want to lose my money - I save your paper checks ((ie he trusted a private small business more than any international bank)) and will cash them all on the way home".

later he said that US Cash worked out very well for him back home.

Sounds like a smart kid.

The first time I was screwed by a bank was the first time I got a bank account. I was around 19 at the time. I had borrowed money to buy a new-ish truck. I got the bank account specifically to handle the payments, since I could have my employer direct deposit, and the truck payments paid automatically by the bank - the same bank that held the lean on my truck. This was actually a promotion the bank was running, and all I did was sign the papers.

They somehow started making double payments every month which quickly depleted the small amount I was leaving there, and then charging me both late fees and bounced check fees. Before I caught on the bank said I owed more than I had borrowed to buy the truck.

One letter from a law firm and I folded. At 19 I didn't know enough to fight it. They got my money and my truck, and then sent me a bill for, I think, $7K (I had borrowed less than that for the truck) and change which I paid with interest over the next 3 years. I was 35 before I got another bank account.
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#5
This is the left wing Guardian talking up a corruption scandal. The other way to look at this is that this single incidence was detected, those guilty punished and everyone moved on. In other words the system works.

In half a lifetime of experience in the 3rd world I can tell you that the vast majority of corruption is where government gets involved in transactions. Where an approval or permit is required from a government official, graft abounds.

As for those apocryphal Greek shipping magnates, it's a myth: The Greeks are the dodgiest, most corrupt people in Europe.

When the buying and selling of things is to be regulated, the first things to be bought and sold are the regulators.
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#6
(07-02-2018, 05:23 AM)andrew_o Wrote: This is the left wing Guardian talking up a corruption scandal. The other way to look at this is that this single incidence was detected, those guilty punished and everyone moved on. In other words the system works.

In half a lifetime of experience in the 3rd world I can tell you that the vast majority of corruption is where government gets involved in transactions. Where an approval or permit is required from a government official, graft abounds.

As for those apocryphal Greek shipping magnates, it's a myth: The Greeks are the dodgiest, most corrupt people in Europe.

When the buying and selling of things is to be regulated, the first things to be bought and sold are the regulators.

I don't think you can separate banks from the government in any meaningful way, so the corruption discussed in the article was due to the government being involved as well. Adjusting prices to keep a troubled business going when its demise would be problematic wouldn't even be a crime without government meddling. Agree with you about the Greek shipping magnates.
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