In modern capitalism, it seems as if stories of companies and managers who engage in fraud and swindle their investors occur like the changing of the seasons.

In fact, these scandals can be traced back to the origins of publicly traded companies, when the first stockbrokers bought and sold company shares and government securities in the coffee houses of Londons Exchange Alley during the 1700s.

As a historian of 18th century finance, I am struck by the similarities between whats known as the Charitable Corporation Scandal and the recent collapse of FTX.

A noble cause

The Charitable Corporation was established in London in 1707 with the noble mission of providing relief of the industrious poor by assisting them with small sums at legal interest.

Essentially, it sought to provide low-interest loans to poor tradesmen, shielding them from predatory pawnbrokers who charged as much as 30% interest. The corporation made loans available at the rate of 5% in return for a pledge of property for security.

The Charitable Corporation was modeled on Monti di Pietà, a charitable institution of credit established in Catholic countries during the Renaissance era to combat usury, or high rates of interest.

Unlike the Monti di Pietà, however, the British version despite its name wasnt a nonprofit. Instead, it was a business venture. The enterprise was funded by offering shares to investors who, in return, would make money while doing good. Under its original mission, it was like an 18th century version of todays socially responsible investing, or sustainable investment funds.

Raiding the fund

In 1725, the Charitable Corporation diverted from its original mission when a new board of directors took over.

These men turned the corporation into their own piggy bank, taking money from it to buy shares and prop up their other companies. At the same time, the companys employees began to engage in fraud: Safety checks ceased, books were kept irregularly and pledges went unrecorded.

Investigators would ultimately find that 400,000 or more in capital was missing roughly $108 million in todays U.S. dollars.

In the autumn of 1731, rumors began to circulate about the solvency of the Charitable Corporation. The warehouse keeper at the time, John Thomson, who was in charge of all loans and pledges but also in league with the five fraudulent directors, hid the companys books and fled the country.

At the shareholders quarterly meeting, they found that money, pledges and accounts had all gone missing. At this point, the proprietors of the Charitable Corporation stock appealed to the British Parliament for redress. One-third of those who petitioned were women, a proportion that equaled the percentage of women who held shares in the Charitable Corporation.

Many women were drawn to the corporation because of its public mission in providing small loans to working people. Its also possible that they had been intentionally targeted for fraud.

The parliamentary investigation led to various charges being leveled against both managers and employees of the Charitable Corporation. Many of them were forced to appear before Parliament and were arrested if they did not. The managers and employees deemed most responsible for the 1732 fraud, such as William Burroughs, had their assets seized and inventoried in order to help pay back the shareholder losses.

Bankruptcy proceedings were started against the banker and broker, George Robinson, and the warehouse keeper, Thomson. Both Sir Robert Sutton and Sir Archibald Grant were expelled as members of the House of Commons, with Grant being prevented from leaving the country and Sutton ultimately prosecuted in several courts.

In the end, the shareholders received a partial government bailout Parliament authorized a lottery that reimbursed only 40% of what the corporations creditors had lost.

The risks of concentrated power

There are several key characteristics that stand out in the collapses of both the Charitable Corporation and FTX. Both companies were offering something new or venturing into a new sector. In the formers case, it was microloans. In FTXs case, it was cryptocurrency.

Meanwhile, the management of both ventures was centralized in the hands of just a few people. The Charitable Corporation got into trouble when it reduced its directors from 12 to five and when it consolidated most of its loan business in the hands of one employee namely, Thomson. FTXs example is even more extreme, with founder Sam Bankman-Fried calling all the shots.

In both cases, the key fraud was using the assets of one company to prop up another company managed by the same people. For example, in 1732, the corporations directors bought stock in the York Buildings Company, in which many of them were also involved. They hoped to juice stock prices. When that didnt happen, they realized they couldnt cover what they had taken out of the Charitable Corporations funds.

Fast forward nearly 300 years, and a similar story seems to have played out. Bankman-Fried allegedly took money out of his customer accounts in FTX to cover his cryptocurrency trading firm, Alameda Research.

News of both frauds also came as a surprise, with little advance warning. Part of this is due to the ways in which managers were well respected and well connected to both politicians and the financial world. Few public figures mistrusted them, and this proved to be a useful screen for deceit.

I would also argue that in both cases the companys connection to philanthropy lent it another level of cover. The Charitable Corporations very name announced its altruism. And even after the scandal subsided, commentators pointed out that the original business of microlending was useful. FTXs founder Bankman-Fried is an advocate of effective altruism and has argued that it was useful for him and his companies to make lots of money so he could give it away to what he deemed effective causes.

After the Charitable Corporations collapse in 1732, Parliament didnt institute any regulation that would prevent such a fraud from happening again.

A tradition of loose oversight and regulations has been the hallmark of Anglo-American capitalism. If the response to the 2008 financial crash is any indication of what will come in the wake of FTXs collapse, its possible that some bad actors, like Bankman-Fried, will be punished. But any regulation will be undone at the first opportunity or never put in place to begin with.

Amy Froide, Professor of History, University of Maryland, Baltimore County

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Our new weekly Impact Report newsletter examines how ESG news and trends are shaping the roles and responsibilities of todays executives. Subscribe here.

Who is to blame for all this unhappiness at work? A lot of it probably had to do with the lack of trust.

Watercooler gossip spread (mostly via Slack) of employees working two jobs on the clock, outsourcing their jobs to others, or acting like they were working from home while living a digital nomad lifestyle. Bosses, paranoid about not being able to see their direct reports in person, were also rumored to be lying about remote opportunities or reneging on promised pandemic perks.

The reality is, as always, somewhat less interesting: 2022 was a year of miscommunication at work more than anything else. Just like characters dealing with a fabricated conflict an hour into a rom-com, bosses and employees kept failing to see eye to eye. This became especially apparent as companies struggled with a number of failed attempts to get their workers back to the office. The whole world seemed to debate the future of work, with battle lines drawn between those who want a radical change in where and how we should work and those who want to return to 2010s office life.

Were going through a massive kind of philosophical transition in the way we view work, says Kim Ades, CEO of Frame of Mind Coaching, a career coaching firm for leaders. The traditional way of work where managers can monitor employees in an office is clashing with the new self-guided approach to work that requires trusting employees to get their work done remotely, she explains to Fortune. Its a tough pill to swallow for some executives, and its creating a troublesome communication gap that makes everyone mistrust one another.

We have a whole bunch of employees who have certain needs, and theyre not expressing those needs very well, Ades says. And we have a whole bunch of leaders who arent able to access or understand those needs.

Debunking the employee lie

As some employers pushed for a return to normalcy, many workers went to great lengths to hang onto their newfound flexibility and work on their own terms. After all, they were just as productive working from home for more than two years.  

In a time where salaries arent meeting the cost of living, some people took on two jobs to increase their paycheck. These overemployed workers have been living Hannah Montana lifestyles at work. It was way easier than I thought it would be, a 25-year-old worker juggling software engineering and software development jobs told The Guardian. Both companies have very low expectations, so Im not really struggling to get away with two jobs. 

Meanwhile, others have been outsourcing their jobs. Its nothing new, wrote Rebecca Knight for Insider, but remote work carved out more opportunities for it. Knight also documented how employee and job-candidate fraud are on the rise, such as having peers impersonate candidates or complete a coding test for them. While its difficult to track real data, she says, the anecdotes are plentiful throughout Reddit.

Then, theres what Bloomberg calls stealth workers, who might put on a warm sweater while working from a desk at an Airbnb in Tulum just to look like theyre based near their companys NYC headquarters. Theyre operating under a work-from-home policy that may not necessarily translate to work-from-anywhere due to tax purposes. 

While some of these workers might be blatantly trying to get away with something, Ades says most just arent truly communicating or are taking initiative after their employer refuses to hear them out. Theres no evil player here, she adds, explaining that people find an avenue that works for them when faced with a lack of opportunity or flexibility. She cites an example of a young professional she coached who asked leaders for more responsibility only to be denied. With extra time on her hands, she ended up working a side hustle, with two computers running in front of her.

Who is cheating who? asks Ades. The issue is that organizations arent taking time to really understand the capacity and the potential contribution of each individual.

The bulk of whats going on is a lot less extreme than straight-up lying, seconds Steganie Tignor, VP of data science at human resources software company Humu. She adds that forgetting to be intentional about checking in, especially while working virtually, can lead to unintentional fibbing.

Employers dont know how to communicate

Workers arent the only ones under scrutiny for seemingly deceptive actions. Co-founder of HR platform Topia Steve Black explained in an op-ed for Insider that some companies are advertising remote work with more strings attached than meets the eye. Workers learn after taking the job that the work from anywhere promised in the listing comes with limitations, such as not being able to work out of the country because of immigration laws. In some cases, bosses may let their employees discreetly work abroad despite it being illegal, feigning ignorance to the company instead.

And, coming into year three of the pandemic amid fears of a recession, some CEOs have reneged on pandemic employee perks initially designed to retain employees in a hot labor market and to address their mental health. Salesforce ended its monthly well-being vacations, while Meta CEO Mark Zuckerberg started sending memos about more aggressive expectations right before laying off 13% of his company. 

But this is all mostly a response to ever-shifting times, says Josh Bersin, founder of Bersin & Associates. 

Most employers are truly confused about their long-term hybrid work strategy, so they may expect to have remote work jobs, but later in 2023 decide that they are hybrid and require some amount of time in the office, Bersin tells Fortune. Most companies are struggling with these policies now. 

If employers straight up lie about remote opportunities theyll simply lose the remote candidates, he says, adding that they likely arent regularly doing this because it can create image issues. The reason this appears to be happening is the very rapid changes in employment strategies: open the office, close the office, all work at home, some work at home, hybrid work (whatever that means), he says. CEOs are adjusting these policies almost weekly, so the external communications just dont always keep up.

Workers and bosses need to curb their missed connections in 2023

Because were still adapting to a somewhat post-pandemic work environment, its too early for concrete data on how prevalent deception is in the workplace. But the stories of deceit show that remote work has fostered new opportunities for employees to try and work on their terms, creating conflict for companies desperate to retain and attract workers in a hot market.

Companies might be serving a bit of a white lie when they say individuals can work from anywhere, just as workers might not be telling the entire truth when they pretend theyre working from home while actually traveling the world. But remote work and digital nomading are new-ish trends with new legal problems to navigate; its very possible no one really knows that theyre actually lying until the tax bills come in.

Besides, Tignor says these situations are rare, and managers can avoid them by focusing on the day-to-day and having regular conversations. Since theyre often the face of the organization these days, theyre tasked with building trust and being a company spokesperson without being properly trained for it.

While employee-employer trust can be just as strong remote as it is in person, she adds, it does take more intentionality to build in a remote environment. A lack of continual contact and support can be the breeding ground for instances of miscommunication that look like a lie at first glance. 

Providing clear expectations could also relieve some of the pressure, Ades notes. If we looked at the workforce differently, if we looked at our outputs differently, then there wouldnt be so much of a clash.

Everyones just trying to do their best, she says. Heres to a year of trying our best a bit harder in 2023.