(By Dr. Joseph W. Koletar) It is perhaps the oldest question in the world: A child asking a parent, “Why is the sky blue?”

As adults, in the world of governmental and corporate affairs, we ask our own version of that simple question: “Why did they do it?” Think of Madoff, Skilling, and so many others – rich, powerful, praised and recognized, but resorting to deceit. Why?

The question bedevils us. It makes no sense. It defies logic, but we make a mistake. We try to apply logic to human affairs. That, largely, is folly. There is, to be sure, logic there, but is not readily apparent unless we study the human mind.

To rise to a position of power you are, by definition, a competitive person. Others want what you want. Once in the position of power, the point of reference becomes horizontal rather than vertical. “How do I stack up against the competition?”

The noted psychiatrist Donald L. Nathanson (Shame and Pride) writes extensively about shame, perhaps the most powerful of human emotions (we usually think of love or hate.) Silvan S. Tomkins points out that humiliation is shame to the extreme. We almost always feel shame in a direct and personal sense: we have hurt someone close to us, intentionally or inadvertently. But is the equation different in the horizontal world of CEO’s and CFO’s? Do they feel shame because they hurt another, or do they feel shame because they may lose their prominence and fall to the dreaded “Number 2, or Number 3?” (Or, perhaps, in such cases, could it be humiliation?) To the victor go the spoils. The list of accolades for the losing team in the Super Bowl is markedly small.

Thus, does an imputed and self-perceived, fear of shame or humiliation drive “C” suite executives to take “extreme measures,” such as cheating? Do they cover their tracks with “save the company” rationalizations, but line their pockets in the process? Is ego the base motivation? There is “logic” to all of this, but it is grounded in the base mental motivation, with rationalization merely an instrumentality toward an end. Being “Number 1” is the goal, and being on the cover of financial magazines is the first of many trophies (plus the money.) Bethany McLean, in an interview covered elsewhere on this blogsite, gives us a good example in talking about Jeff Skilling: “…He had to engage in some of the structures that he did because he had to keep the stock price up. It would be bad for his investors to have the stock decline. It’s that rationalization that you’re doing something in service to something larger than yourself, but it is actually very self-serving because it’s your ego that can’t stand defeat.” What is more damaging to ego than the experience of shame?

If we try to understand executive misdeeds only from the perspective of investigations, lawsuits, regulatory actions, and the like, we miss the essential point; the eternal point.


Joseph W. Koletar
© 2016




The Behavioral Forensics Group is a team of professionals with vast experience in detecting fraud, understanding why it occurs, and in recommending steps to mitigate fraud incidence within the corporate workplace, particularly within higher-level (and therefore more costly to the enterprise) executives.  The fields of investigation, organizational psychiatry, accounting and behavioral forensics, and law enforcement are represented within the Behavioral Forensics Group.  Acting in synergy to help organizations prevent, find, and/or reduce fraud, BFG is a premier, pioneering practice in this field.

We are blogging at: http://www.bringingfreudtofraud.com

Leave a Reply

Your email address will not be published. Required fields are marked *