Aaron Beam is the former CFO and co-founder of HealthSouth. For his role in participating in the <\/em>HealthSouth financial statement fraud in 1996 (soon after which he had left the company), he was prosecuted and sentenced in 2003 to 3 months in a minimum-security prison and had his CPA license revoked.<\/em> (By Aaron Beam) \u201cI don\u2019t think human beings are bad. They\u2019re weak. And that\u2019s what makes them bad.\u201d This was a quote from a \u201c60 Minutes\u201d TV interview with Michael Caine the movie star. BEHAVIORAL FORENSICS GROUP<\/span><\/b><\/p>\n \u00a0<\/span><\/b><\/p>\n The\u00a0Behavioral Forensics Group<\/i>\u00a0is 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.\u00a0\u00a0The fields of investigation, organizational psychiatry, accounting and behavioral forensics, and law enforcement are represented within the\u00a0Behavioral Forensics Group<\/i>.\u00a0\u00a0Acting in synergy to help organizations prevent, find, and\/or reduce fraud, BFG is a premier, pioneering practice in this field.<\/span><\/p>\n
\n For over 10 years, he has been speaking to several audiences, including more than 50 college and university campuses. Last year, he spoke to Prof. Sri Ramamoorti\u2019s internal audit class at Kennesaw State University. He has also written books such as <\/em>The Wagon to Disaster (about the HealthSouth fraud), and <\/em>The Ethics Playbook (guidance on ethics to those pursuing careers in business).
\nThe HealthSouth<\/em> fraud, with a particular focus on Aaron Beam, is covered in A.B.C.\u2019s of Behavioral Forensics: Applying Psychology to Financial Fraud Prevention and Detection<\/a> (Ramamoorti, Morrison, Koletar & Pope, 2013).\u00a0 This is his second guest blog, and\u00a0Mr. Beam has agreed to write future guest blogs for www.bringingfreudtofraud.com.<\/p>\n
\nWhen I heard Michael Caine make this paradoxical observation, it really struck a chord with me. A corollary to his statement is the often quoted phrase \u201cthere are not that many evil people in the world but there are many, many people who let others do evil things.\u201d Philosopher Edmund Burke remarked, \u201cThe only thing necessary for the triumph of evil is for good men to do nothing.\u201d
\nFor the past 20 years I have been asking myself, why did I take part in the Healthsouth<\/em> fraud? I always come back to the answer that I was not inherently an evil-doer but I was weak and I lacked the courage to do the right things. I took the path of least resistance\u2014the easy way out.
\nFortunately, one of the great things about being human is that we can learn and build courage. An excellent book by Mary C. Gentile titled \u201cGiving Voice to Values<\/em>\u201d was published in 2010. The book\u2019s main focus is how to develop the \u201cscripts\u201d and implementation plans for responding to the commonly heard reason and rationalization for questionable practices and practicing the delivery of those scripts. The book is about building the skills, the confidence, the moral muscle and the habit of voicing our values.
\nLooking back at my life, I realize that I would nearly always run away from problems and confrontation. When I faced the pressure of being the CFO of a Fortune 500 company, my approach typically was to take the easy way out. I took the course that caused me the least pain. Many times these choices were borderline–on the edge of ethical.
\nWith the help of Dr. Gentile\u2019s book and other ethics authors and professors, I now realize courage can be learned. As you learn to voice your values, you develop confidence. This in turn helps build even more ethical strength. It is like most things in life: you have to practice to become proficient and strong.
\nNumerous studies have documented that CFO\u2019s are likely to become involved in material accounting frauds because they succumb to CEO pressure, not because they seek immediate financial benefit (e.g. Feng et al. 2011). During the fraud at Healthsouth<\/em>, the CEO received $265,000,000 in compensation. I took part in the fraud for less than a year and my last bonus was $300,000. This was in line with bonuses I had received before the fraud began.
\nIn retrospect, I would gladly give up the $300,000 to keep my personal integrity and reputation intact. Of course, that would have required great reservoirs of moral courage that I simply did not seem to have at the time. This is one of the key points made in The Ethics Playbook\u2014hopefully, the younger generation can learn from my experience.
\nReferences:
\nBeam, A. & Womble, G. (2015). The Ethics Playbook: Winning Ethically in Business.<\/em> www.aaronbeam.net.
\nFeng, M., Ge, W., Luo, S. & Shevlin, T. (2011). Why do CFOs become involved in material accounting manipulations?<\/em> Journal of Accounting and Economics, Vol. 51, pp. 21-36.
\nGentile, Mary C. (2010). Giving Voice to Values: How to Speak Your Mind When You Know What\u2019s Right<\/em>. New Haven, CT: Yale University Press.<\/p>\n