Crisis at the Mill: Weaving an Indian Turnaround Harvard Case Solution & Analysis

Crisis at the Mill: Weaving an Indian Turnaround Case Solution

Analysis of fraud through using the Fraud Triangle model

From the following case, it has been analyzed that the main reason of conducting the investigation for Alvarez & Marsal was to determine any fraud activity that would hinder the company’s overall performance. However, under this case, there are many participants involved in a fraud activity according to the perception of investigation team provided by A&M.

 While excluding all the members under fraud behavior, there were only two major people under the company, who would consider to be more dangerous for A&M’s future, hence it was identified that these two people were the CFO and the CEO of the company. Therefore, in order to take action against them, a formal meeting was held by the chairmen and the special team of A&M consisting of the interim management and the investigation team.

Thus, from the meeting, it was confirmed that their involvement was under high consideration. Due to this, the chairman planned to eliminate them and replaced with the new management. When analyzing the fraud and fraudulent behavior, a simple Fraud Triangle model would help to provide transparency level of how such fraud took place, as well as it would give the root cause of increase in the fraud activity overtime if certain actions would not be implemented properly on time.

Fraud Triangle Model

It is the framework used to analyze the fraud activity by the subject through using the three factors that would be able to clarify transparency level of how such fraud would take place at the given time. Therefore,under this model, the factors include the use of pressure, opportunity and rationalization. Therefore, the following factors have been explained with reference to the current case scenario:

Individual’s pressure in A&M

Under this cenario, it shows that the main root cause of the fraud was held by an individual or the whole workforce involved. Thus, it has been analyzed that five members of the management were considered to be the main people to motivate this activity and to decrease the company’s performance overtime. On the other hand,two of them were the company’s CFO and CEO, who contributed a full disclosure of the operations. On the other hand,these two were the top level people to execute the fraud due to which the company’s performance was affected.

Opportunity for the members to commit fraud

The situation clearly shows that the members tried to hide the actual fraud activity by not disclosing the financial information, which would be selected for the investigation. It also indicates that they were looking for fraud indirectly. However,it seems that every negative act would always be disclosed at a particular period of time and there is always a clue when investigating something. Under this case, the same situation took place when an employee was accused of improper use of operations and therefore,received the request to modify them in order to sustain the process under control.

Unable to rationalize the crime by the members under fraud

It is identified that when someone would commits a fraud, they are aware of the consequences of such an activity. Therefore,under the rationalized theory, it has been analyzed that the participant should be strong enough to defend himself by the use of external power such as professional or political links or other sources.

Thus, in this case, the participants committing fraud had less authority to prove not guilty as they worked under the chairman of the board, who was responsible to take certain actions against them. Also, the investigation team consisted of those members that had the power to execute the operation.

Therefore,with all these processes, it is determined that the members would be unable to rationalize themselves in favor of not committing a fraud as well as not being able to prove in the court that they had no concern regarding the un sustainability in the operational activities....................

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