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C. Gopinath

WORLDCOM Inc. and Enron made banner headlines last year when the accounting frauds their senior executives had committed began to unravel slowly. WorldCom, a telecommunications firm, first announced that it had made financial misstatements to the extent of $4 billion (Rs 19,200 crore). Although coming soon after the Enron revelations, the stock markets were still shaken by the size of the fraud. Then WorldCom revised the figure to $7 billion (Rs 33,600 crore) and the final tally came to $11 billion (Rs 52,800 crore).

The company has since gone into bankruptcy protection and in negotiations with the Securities and Exchange Commission, a deal was announced towards the end of last month wherein the company would pay $500 million (Rs 2,400 crore) as fines to settle the fraud. The money would be paid into a fund for investors who were victimised by the company's fraud. This is the largest such civil fraud settlement in the US, yet critics are calling it too small a penalty considering the size of the fraud, and the judge who will rule on the matter has promised to look into the settlement very carefully.

As frauds go, although the amount is significant, the credit for the longest running scam must surely go to what is commonly referred to as the 419 fraud cases from Nigeria. (The number refers to the Nigerian Penal Code number relating to Advance Fee Fraud). Every week, I get a couple of e-mails promising me sums ranging from $4.5 million (Rs 22 crore) to $50 million (Rs 240 crore) if I would participate in a scheme to transfer money. I must confess that my first reaction was to take the money and run.

The amount represents my share at between 20 per cent and 35 per cent of the funds involved. Five-10 per cent is claimed to go towards expenses and the remaining to the initiator of the scam.

Some of the claims are presented as legitimate activities. (That peaks my interest further.) For example, the money is said to belong to a deceased person who has no next of kin and will revert to the bank if not claimed within the year. Thus, there is no illegal activity and it is positioned as a business proposition. The originator of the message would claim to be an auditor or other bank official with access to this information and power over the procedures for transfer. All I have to do to get my share for the help I provide is to open a bank account in my name.

The more shady claims are fun to read. One claimed to be the relative of former Nigerian dictator, Sani Abacha, now looking for a way to get his loot out of the country. Another claims to be the carrier of funds from Europe to rebels in Sierra Leone who spirited some away before being caught.

A third just hints that the amount was skimmed off some major government contracts in South Africa. I would love to know the basis on which these scammers have concluded that I like to live life dangerously.

Although initially most of these scams claimed to originate from Nigeria, the entrepreneurs have decided to spread their wings in our globalised world (and perhaps to shake away the `Nigerian scam' reputation) by showing addresses in South Africa, Taiwan, France, and Australia. One even claimed to be working with the reputed National Westminster Bank in London.In all cases, I would have to provide my bank particulars for the transfer and no expenses would be borne by me. Too good to be true!

Of course, once I show some interest and take the bait, I will be sucked in to provide small sums before I catch on. It is difficult to imagine that any right thinking person would fall for this trap but clearly some have.

I came across an article written by a Pakistani who got taken in. He thought he was helping a brother Muslim in Nigeria and started providing some small sums for a proposed investment project.

On being rebuffed, and after having spent some $51,000 of his money, he decided to go to Abuja and tracked down the scam artists. He ended up being threatened with physical violence, found little support from local police authorities and returned poorer but wiser.

Another approach to dealing with these scam artists is to look at it as a game and to join the fun. Several websites, such as www.camorama.com, www,geocities.com/scamjokepage, and www.quatloos.com provide us with the hilarious experiences of these scam baiters. They also contain sad reports from some victims who have lost money. The strategy of the baiters is to first pretend to be interested in the scheme and take on false names and e-mail addresses for correspondence. Some just have extended correspondence with the scammers and string them along giving them hope that they have got a sucker. Others take it even further by arranging meetings at third country locations, thus making the scam originator spend some money before dropping the ball. They set up meetings and then cancel them, or ask the perpetrator to send a photograph of themselves at a particular location as proof, and so on.

The Internet has been a big boon to these scammers. Much like a fisherman who drops several lines into the river and then waits for the fish to bite, these scammers access e-mail addresses by scouring the Internet, then send out their missive and wait for a few gullible individuals to respond. Surely, some people have made money in this effort and that keeps them going. Law enforcement agencies will be hard-pressed trying to track them down and putting an end to this. They should perhaps outsource investigation. Just like police forces often recruit convicted computer hackers as consultants to help identify other potential hackers, senior executives of WorldCom and Enron could be roped in to deal with these scam artists. As part of the penalty for ruining their companies with accounting frauds, they should be made to sit in front of computers stringing along these e-mail scammers so they would leave everyone else in peace. After all, these executives played similar con games, only on a bigger scale.

Those who treat it as a game and play along not only have a cheap new hobby but are also doing us a service if they manage to frustrate a few of the scammers. I believe in even more passive resistance. I find it easiest to keep my little finger poised ready over the `delete' key and have become very good at recognising the scam e-mails even from the index.

(The author is professor of international business and strategic management at Suffolk University, Boston, US. His Internet address is cgopinat@suffolk.edu)

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