Professor Mark Button, Co-Director Centre for Cybercrime and Economic Crime
As the Trump administration causes upheaval in the USA and globally across various policy areas, it becomes challenging to stay informed about the rapid developments and understand their consequences. One significant area affected by recent policy changes is the increased risk of economic crimes, including fraud, corruption, and economic espionage, among others.
Softening on corruption is only the beginning
Some commentators have already noted the softening of enforcement to corruption, with the pausing of the enforcement of the Foreign Corrupt Practices Act Enforcement, pardoning of the former Illinois Governor Rod Blagojevich (who had been sentenced to 14 years jail for various corruption offences) and the filing of a motion to dismiss its corruption case against New York City Mayor Eric Adams.
The pause on enforcement of the FCPA alone Transparency International described as a ‘major blow’, that ‘risks undermining decades of progress in tackling cross-border corruption’ and ‘will work to the advantage of unscrupulous business actors around the world’. Another commentator described the change as ‘Trump comes out in favour of corruption’.
The release of Ross Ulbricht, the founder of the Dark Web forum for selling many criminal ‘products’, the Silk Rd, adds further to the narrative of weakening the resolve to tackle various forms of economic crime.
Hostility and stress are linked to economic crime
However, it is perhaps the Musk's Department of Government Efficiency (DOGE) that poses the greatest risk to furthering economic crime, particularly fraud. A massive reduction in over 300,000 jobs, with whole organisations abolished, such as USAID. The approach to pursuing these job losses has been very disrespectful and negative with blanket emails asking what they do, with the threat of dismissal if they don’t respond and many fired by email without consultation.
The hostile approach is important to consider. In 1990 a study was published by Greenberg where three factories were subjected to an experiment. One was a control with no changes and two were subjected to pay cuts of 15%. In one the pay cut was justified with respect and detailed explanations from the most senior officers, in the second there was less detail, respect and lower ranking officials explained the reasons. During the experiment staff theft was monitored and in the control it remained stable at a rate of 3.7, in the adequate explanation it rose to 5.7, but in the inadequate it rose to 8.9; where they had all started from similar rates of theft.
Other studies have linked increased stress among staff to increased levels of staff theft, abusive supervision to increased fraud losses and there is extensive research built upon the Cressey’s fraud triangle linking the opportunity for fraud with financial pressure and the ability to rationalise. It would seem highly plausible many Federal staff do not consider the explanations for job losses detailed, respectful and adequate; many will be stressed, consider the process abusive, will be feeling financially pressured and will have ample potential rationalisations to commit fraud or other negative behaviours.
Trump administration and Musk DOGE so far would seem set to massively increase the risks of economic crime
These likely negative feelings of many Federal staff could lead to substantial increases in fraud and theft losses. The GAO already estimates fraud losses could cost the Federal Government between $233 billion and $521 billion annually. The approach so far which would clearly be on the extreme end of the Greenberg inadequate explanation would seem to be highly likely to fuel more fraud, abuse and error on already high numbers.
It is not just fraud losses that there will need to be a concern about as it has already been reported Russian and Chinese intelligence are attempting to recruit Federal workers, some workers disgruntled at their treatment maybe tempted by such approaches.
The Federal Government may well need trimming, but the tone and approach of the Trump administration and Musk DOGE so far would seem set to massively increase the risks of economic crime from theft, fraud, bribery to espionage negating any benefits they may secure from more ‘efficient’ government, produced from the cuts.
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