Introduction

PREVENTING FRAUD AND MISMANAGEMENT in Government Systems and Structures explores the dimensions of fraud and mismanagement that can and, unfortunately, do exist too often in government entities. Mismanagement is when people manage or control situations poorly. It can be associated with misconduct, corruption, malfeasance, and misuse and may or may not be fraud. Understanding mismanagement and the intent of the parties involved in it leads to skeptical thinking and close scrutiny.

Both of the authors have extensive experience with government entities—as elected and/or appointed officials and as government staffers and/or contractors. Applying their life experiences in dealing with government entities, the authors bring the reader not only an academic perspective but real‐life examples and lessons learned in fraud and mismanagement. Through examples and well‐explained overviews, the authors create a much‐needed awareness of how mismanagement and fraud in government are precipitated, despite consistent oversight. The authors argue that only through keen awareness and sound adjustment of systems to the changing times can the journey to creating a more efficiently managed government begin. The premier issues of status quo apathy remain: that the general public accepts and, all too often, does not care about fraud in government. This attitude resounds on a daily basis, from the national to the local level. Without interest and at times ensuing outrage, mismanagement and fraud will continue in today's governments.

The words greed and need rhyme. The two words work hand in hand in developing an understanding of where mismanagement and fraud might exist in government. From the first breath we take, we learn to need. Need is defined as “a situation in which someone or something must do or have something.”1 Now let's define greed. Greed is “a selfish desire to have more of something.”2 Exploring greed and need in the context of a relevant range of the facts is a key step in correcting areas of mismanagement and fraud in government. The “carrot and the stick” comes to mind when thinking of the establishment of government policies within which a combination of rewards (carrot) and punishments (stick) are used to motivate and control. Once it's understood that a particular “carrot” motivates a person, it is not hard to control that person, as that person's self‐interests are being satisfied.

The authors examine areas in which conflicting interests may be hidden in government systems and structures. A conflict of interest is defined as “conflict between the private interests and the official responsibilities of a person in a position of trust.”3 Examining the trust we bestow on others and the responsibilities assigned to parties we trust is where the focus needs to be placed in order to prevent fraud and mismanagement in government. Knowing where value (transferred into cash) and people can meet that value within the system and structures is key to developing an understanding of the potential for mismanagement and fraud.

PEOPLE ARE YOUR GREATEST RISK AND YOUR GREATEST ASSET

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

Sound familiar? It's the preamble to the U.S. Constitution. A self‐check of unexpected morally guided systems and creation of balance among people are key in getting a good grasp on where fraud and mismanagement can occur in government. This is no different in private organizations, as it all comes down to the tone set at the top of the organizational structure.

Without the proper ethical spirit being instilled at the top and funneled all the way through to the bottom, fraud and mismanagement in government will continue to exist. Notice that the term ethical spirit is used, as it would be impossible to create a position of oversight everywhere to make sure people adhere to the higher principles. What the authors are counting on is that the readers of this book will become informed and assume the friendly watchdog tenor of that future 800‐pound gorilla by holding those in public service accountable.

These are all familiar partnerships: president‐Senate, president‐Congress, president‐voter, husband‐wife, parent‐child, board of directors–chief executive officers, manager‐staff, and mob boss–soldier. What is the common theme? Besides their obvious relationship to one another, they are all just people. So the question becomes: “Whose interests are being served, their own or others'?”

In primary school, the familiar Latin motto was learned: “E pluribus unum.” It translates into “One out of many.” But are all people's needs met equally? How does government handle these differing needs? Is it the proverbial “squeaky wheel” that “gets the oil”? Is a beneficial outcome contingent upon a “horse trade,” making an unethical act for political gain appear acceptable?

The salad bowl concept suggests that the integration of the many different cultures of U.S. residents combine like a salad, as opposed to the more traditional notion of a cultural melting pot. In Canada this concept is more commonly known as the cultural mosaic.

Crayola brand crayons were the first kids' crayons ever made, invented by cousins Edwin Binney and C. Harold Smith. The brand's first box of eight Crayola crayons made its debut in 1903. The crayons were sold for a nickel, and the colors were black, brown, blue, red, purple, orange, yellow, and green. The brand name Crayola was created by Alice Stead Binney (wife of Edwin Binney), who took the French words for chalk (craie) and oily (oleaginous) and combined them.4 The idea is that the more colors in your box, the more diversity and, in turn, the more opportunity for creating a more diversified drawing. Yet in government this diversity comes with a cost and often creates distractions that can lead to diversions and ultimate division.

Government tends to mix all funding sources into one bowl in order to satisfy the vast variety of self‐interests. It is this fishbowl thinking that creates the opportunity for fraud and mismanagement to exist. We like to call it comingling and related‐party subsidies.

Government leaders live their lives in a fishbowl. Most of what they do is up for public perusal, broadcast around the world. They are public servants. As such, their lives are no different from that of the fish being viewed as it swims around in its bowl, subjected to the eye of beholder. National service requires a level of openness unheard of by leaders in the private sector of for‐profit organizations and even nonprofit enterprises. Social networks and media demand a new level of transparency that fosters communication and interest. Generational shifts, technological advancement, revenue shortfalls, and political changes are just a few of the key shifts occurring at all levels of government to create the necessary awareness. This new complexity demands leaders with proactive vision in order to manage effectively.

Terms like salad bowl, colored crayon box, and fishbowl need to be replaced with one term that reflects a united self‐interest. We all know a salad bowl creates diversity in taste, a full box of colored crayons gives a picture with a rainbow‐like effect, and a fishbowl full of well‐balanced fish with no conflicting interests such as hunger remain peaceful and soothing to view. Yet we know that with diversity comes challenge.

We often forget that the concept of the sum of the whole being equal to its parts can be problematic. This whole is based on some type of grouping, such as proximity or similarity, so the parts can be collected in an organized manner. As we know it, this creates consistency in order to attempt to achieve the whole. But does it really? We mentioned the beauty of what happens with combining vegetables in a salad bowl to enhance the taste. We know that having many crayons to choose from in creating that drawing make it more colorful. We know that a fishbowl full of fish that are well‐fed live in peaceful harmony. It's all about balance.

Yet, once conflicting self‐interests are introduced, they may become the overriding force in the decision‐making process. An environment where mismanagement and fraud can flourish has been created. All it takes is for one fish to want to eat more than the food that is available (resources). Soon the fish seeking more food (resources) looks at the other fish as food, and that fish turns on yet another fish. Soon the only fish that's left to eat is the one that has eaten all the resources.

In an organized structure, everyone has to eat in order to maintain balance. Putting the proper policies and procedures in place that help avoid conflicting self‐interests and maintain the resources allows the public entity to remain a viable ongoing concern.

There is no greater government advancement than policies and decisions that advance all people's interests. An adherence policy that requires the core mission and defined objectives of the whole group's interests,...