On 23rd June 2026, Peter Murrell was handed a five plus years sentence for embezzling over £400,000 of the Scottish National Party funds - he was the party's chief executive from 2001 to 2023 . The theft happened over a period longer than ten years and funded Murrell's lavish life style. Full details of the case may be reached here.
The question is: With an annual family income of nearly £250,000 and so much at stake in terms of their very high public profile, why Murrell would feel the need to indulge in criminality that led to his prison sentence and fall from grace for his wife Nicola Sturgeon - a highly respected First Minister of Scotland? Unfortunately, financial crimes are all too common, and have happened in all societies & over all periods of time.
Financial fraud (FF) is generally intentional, planned over a significant period and rarely a one-off - it is often repeated. FF should be distinguished from violent crimes that, in most cases, are unplanned and committed impulsively in the heat of the moment. Violent crimes have a visible signature while financial frauds may be hidden, normally undetectable for long periods and hence the possibility of repeating.
The question I want to understand is - why do people commit financial crimes? But first the statistics - people who commit financial frauds roughly fall under three categories; the so-called 10-80-10 'rule'. It is shown in the next slide:
(please click on the slide to see full page view)
Vast majority (80% + 10%) of people are mostly law-abiding and tend to have no previous criminal record. It is interesting to explore why anyone in the 80% group will consider committing fraud - they are not bad actors, so what circumstances will encourage them to commit fraud.
The Fraud Triangle: Inspired by Svend Riemer's work (1941), the fraud triangle was developed by Donald Cressey (1953) in connection with his research into why trusted employees commit financial frauds. It is a model that is widely used to identify (and also mitigate) fraud risk. The fraud triangle is explained in the next slide:
The fraud triangle is a concept that highlights motivation, opportunity & rationalization as the three conditions that encourage fraud. Absence of any of the three conditions reduces the overall fraud risk - ideally if an organisation can address all three conditions then the risk of financial fraud will be significantly curtailed.
'Opportunity' is the most obvious element that an organisation can control - good management practices can much reduce this aspect of the fraud triangle. Besides doing everything to minimise opportunities to commit fraud, organisations must also take any reports of possible irregularities seriously and conduct thorough investigation.
'Motivation' and 'Rationalization' appear to be employee specific but there is a lot that the organisation can do to alleviate these conditions. It really boils down to knowing your employees well on an individual level - what are their expectations regarding promotions, pay rise, job satisfaction etc.
Employees should feel socially connected with rest of the team and not feel isolated.
Unfortunately, the current business environment is generally moving in the wrong direction - with greater emphasis on productivity increase, cost-cutting and increased competition. Businesses are putting additional pressures on their employees. Senior managers, themselves under pressure, are unable to form a bond of trust with their staff. Most employees are working much longer hours that they are contracted for - adversely affecting their family life. Digital messaging and emails have extended the working day to evenings and weekends as well. Many workers are on zero-hour contracts and living paycheque to paycheque. Money is also talked about much more in the news, social media etc.; money worries dominate a lot of conversations. These developments elevate the general stress levels with money playing a more significant role in peoples' lives. These situations can drive up the motivation and rationalization aspects of the fraud triangle.
Final Word: This feature has been somewhat unusual for my choice of subjects - but it was a compelling news item and deserved a closer look. Interesting that the cost of police investigation of Peter Murrell case was 2.7 million pounds. Keeping him in jail for five years will also be very costly. However, it is important that these cases are investigated and perpetrators brought to justice to maintain confidence in the due processes of law and order.
Several concerns about Murrell's behaviour were raised at various times but these were ignored and not investigated. I am sure that the fact that Murrell's wife, Nicola was the first minister has nothing to do with it - after all she was not even aware of the existence of the very expensive luxurious motor home that Murrell had acquired!
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