[sophacles]

If I go to widgetco and purchase a widget for $100, but it only costs them $50 to make that widget (including all salaries, marketing etc), what do we call that?

That's right profit. They provided me the thing I wanted for a price I agreed to, and they did so in a way that generated some extra $ for them.

Why is it Fraud then when a worker is asked to provide KPIs in exchange for $salary, and meets them in less than the expected time? Wouldn't that be profit also?

[jollybean]

This is the wrong analogy - this is not a situation where there is transparent exchange of good or services.

The OP indicated lying literally in the title indicating there is a lack of transparency and oversight, probably at a systematic level.

So adjust the analogy:

You are buying 'Medical Grade' widgets for $100 a pop for the last 5 years for your projects.

Turns out, the Widgets you were buying were cheaply made and not up to specification.

Because it's difficult for you to check the integrity of the widgets (i.e. there is a lot of trust in the system), you 'trusted' the source only to be defrauded.

And FYI even at $100 a pop, I'm sure you could care less how much or little profit they were making, so long as the terms were clear. Much like nobody cares if an employee is only working 2 hours a week, if everyone thinks that value is provided.

But that's almost assuredly not the case.

[derivagral]

Aren't you assuming that code quality suffers? I don't think that we can assume that in regards to code on this topic. OP's company appears to happily agree that the product is on-spec.