PwC sounds alarm on economic crimes
Some 39% of listed companies have been victims of fraud in the past year, suggesting the crucial need for corporations to beef up their fraud-preventive measures, according to PwC’s latest survey on global trends in economic crimes.
According to PwC’s “2016 Global Economic Crime Survey: Economic Crime in Thailand”, there has been an alarming surge in economic crimes, ranging from external hacking to internal employee fraud.
Asset misappropriation was the most common economic crime in Thailand, accounting for 78% of reported fraud compared with 64% globally.
Employees continue to be the most common perpetrators, representing 77% of fraudsters, according to PwC’s annual survey.
Although the rate dropped from 89% in the previous study, the fraud profile in Thailand has moved from middle management (56% in 2014) to junior staff. As a result of increases in authority and responsibility, junior staff were responsible for more than half of all crimes, up from 36% in 2014.
“Organisations need to step up their corporate anti-fraud measures to prevent, detect and combat such abuses,” said Vorapong Sutanont, forensics partner at PwC Consulting (Thailand).
“This year’s findings reinforce the need to have even stronger anti-fraud systems in place and better communication to staff that fraud won’t be tolerated.
“Employee morale also plays a role in fraud risk because disgruntled staff are more likely to cheat their employers,” he said.
Mr Vorapong said the lack of understanding of a company’s whistle-blowing policy often led management to miss red flags that could have alerted them to fraud.
“Employees must know the process of notifying management about escalating red flags with evidence. A well-defined policy will help cut ambiguity,” Mr Vorapong said.
Apart from the rising number of fraud cases by internal staff, cybercrime rate has seen a rapid climb with the survey showing that 22% of respondents have been affected by cyberattacks over the past two years.
In fact, the findings showed that Thailand’s cybercrime rates rose sharply in 2014 and 2015, jumping from the fourth to second-highest economic crime compared with the previous survey.
As more companies get involved with the Internet of Things, Mr Vorapong said the risk of cyberthreats was expected to further escalate as online attackers use the internet as the main channel to commit fraud.
Nearly 20% of cybercrime victims in Thailand reported losses of more than $100,000. Another 4% lost between $1 million and $100 million, the findings showed, highlighting the need for businesses to have robust IT policies and systems in place.
Among survey respondents, loss of personal information is the most damaging outcome of cybercrime, followed by damage to reputation, and intellectual property loss.
Furthermore, bribery and corruption remain major concerns among respondents despite the lower rate reported in the latest survey.
Looking at the data, Thailand’s overall bribery and corruption rate fell 20 percentage points in the survey period, with 19% of respondents reporting corruption compared with 39% in 2014 and 54% in 2011.
Such a drop is attributed to recent efforts by the government and private-sector bodies to combat corruption, including the establishment of a criminal court for state officials and separate regional courts for provincial cases.
The Council of State is expected to pass an executive decree to address corruption by the end of 2016.
However, 15% of respondents said they had been asked to pay a bribe in the last two years, compared with 13% globally.
The findings come on the heels of stepped-up enforcement of anti-corruption legislation such as the US Foreign Corrupt Practices Act, which targets US companies operating abroad.
“Thailand has sought to strengthen its anti-corruption policies, legislation and enforcement in recent years,” Mr Vorapong said. “Increasingly, we are seeing regulatory and law enforcement agencies holding officials and companies accountable for corrupt activities, and we expect this trend to continue.”
As f or multinational companies, Thailand is generally a businessfriendly jurisdiction.
However, Mr Vorapong suggested that understanding Thai business practices was crucial to avoid committing unforeseen fraud and misconduct.
“Foreign companies with operations in Thailand are especially susceptible to all types of economic crime. Some of this comes down to lack of experience with the local culture and practices,” he said.