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With a raft of surveys showing an alarming lack of interest in the prevalence of fraud, bribery and corruption in Malaysia, it’s up to all of us to take action, says Errol Oh

This article was first published in the June 2014 Malaysia edition of Accounting and Business magazine.

One day, somebody will produce a dissertation on how animated TV series The Simpsons has altered the course of world history.

Meanwhile, here is a small taste of its profound wit and wisdom.

When asked a question peppered with figures during a news interview, Homer Simpson responds with his trademark blend of blithe idiocy and hollow assuredness: ‘Aw, you can come up with statistics to prove anything, Kent; 40% of all people know that.’

Whether you are part of that 40% or not, it is hard to ignore some patterns in the findings of three recent surveys by Big Four accountancy firms on fraud, bribery and corruption in Malaysia.

The first thing that should grab anybody’s attention is the perception that there is a strong tendency towards fraud and unethical behaviour in the country. For example, 39% of the Malaysian respondents in EY’s Asia-Pacific Fraud Survey 2013 say that bribery or corrupt practices happen widely in Malaysia. This is nearly double the region’s average of 21%. More than half think that management is likely to take shortcuts to meet targets when the economy is down – again, double the Asia-Pacific average.

According to the KPMG Fraud, Bribery and Corruption Survey report released in January, 90% of respondents agreed that bribery and corruption are major concerns for Malaysian business generally, while 83% have the same opinion about fraud.

What is troubling is the apparent level of acceptance, with 71% of respondents believing that bribery and corruption remain an inevitable cost of doing business, while 64% reckon that business cannot be done in Malaysia without paying bribes.

When PwC published the Malaysian cut of its 2014 Global Economic Crime Survey in April, the firm did not even try to jolt us with numbers showing the prevalence of economic crime, which is defined as the intentional use of deceit to deprive another of money, property or a legal right.

PwC Malaysia executive chairman Dato’ Mohammad Faiz Azmi argues that the fact to highlight is not so much that economic crime continues to be an issue for organisations of all sizes and all sectors.

‘The real story is that a number of organisations in Malaysia are not taking preventive measures to combat the threat,’ he says.

This conclusion is based on survey results that reflect a corporate version of blissful ignorance. Nearly a third of respondents say they did not know if their organisations had been asked to pay a bribe in the last 24 months, and 42% also cannot answer yes or no as to whether they have lost an opportunity to a competitor which they believe paid a bribe.

‘This is too high,’ says PwC. ‘In any organisation, management should be aware of the risks that it faces from the threats coming from bribery and corruption.’

This observation is supported by the finding that almost half of respondents say they either have not undertaken a fraud risk assessment in the last 24 months or did not know if they have.

Yet, we constantly hear of increasing emphasis on identifying and mitigating risks. The Deloitte Southeast Asia CFO Survey 2013, for instance, found that 72% of the CFOs polled are more involved in risk management than a year ago.

The EY survey points out that in the fight against fraud and corruption, there is a disconnect between policies and practice.

Risk management begins with risk assessment; you cannot manage what you do not know. And that is merely the first step. To minimise vulnerability to economic crime, a company needs to install sturdy controls and develop an ethical culture.  

It is easy to whine and moan about fraud and corruption, but it takes a lot more to really do something about these ills. We do not need surveys to tell us this.

Errol Oh is executive editor of The Star

Last updated: 29 May 2014