First-ever Thailand survey finds ‘fraud’ on the rise – PwC

  • 35% of Thai businesses have suffered one or more types of economic crime in the past year
  • Without stronger anti-corruption and anti-fraud measures, fraud risk seen rising in Thailand
  • 51% have never performed a fraud risk assessment or had no knowledge of any assessment
  • Thai businesses need proper fraud prevention measures ahead of the AEC

BANGKOK, 19 November 2012 – Companies in Thailand face a mounting threat of fraud and cybercrime, with 35% reporting major fraud in the past 12 months, and respondents expecting an increase over the next three to five years, according to PwC’s first-ever Thailand Economic Crime Survey.

Businesses need to be pre-emptive and put in place fraud prevention measures such as whistleblower programmes and proper monitoring of bidding and procurement. Without these things, Thailand can prove a high-risk place to do business, according to Sira Intarakumthornchai, CEO for PwC Thailand.

“Thai businesses are expected to see a rising trend of complex embezzlement, corruption and IT-related crimes over the next three to five years,” Sira said. “We expect to see fraud risk grow in coming years unless businesses meet the challenge head-on.”

PwC publishes an annual global Economic Crime Survey and this first-ever Thailand survey gives businesses a new tool to address risk in the Kingdom. The survey shows that economic crime takes many forms in Thailand. Anti-competitive practices, including price fixing, bid rigging or market sharing, were reported by 25% of respondents – over triple the global average; and 79% said fraud was internal, against 59% globally.

Of internal fraudsters, Thai respondents said more than 80% were in senior and middle management. The study polled businesses and found a growing trend of embezzlement, computer hacking and asset misappropriation, placing Thailand above global threat levels.

Vorapong Sutanont, partner for PwC Forensics Advisory, said that over one-half of the Thai respondents said they had performed no fraud risk assessment or had no knowledge of an assessment at their firm and that these findings show the need for greater preparedness.

“These results demonstrate that companies need to address fraud through both treatment and prevention – relying on accidental detection is not enough. One of the biggest obstacles is that fraud is often dealt with reactively and only when threats are reported or detected by happenstance,” Vorapong said.

“Fraud is hidden in nature and detection by accident generally means it is too late, with greater severity in the magnitude of loss,” he added.

The findings suggest that all industries are at risk, with automotive, chemicals, pharmaceuticals and logistics found to be the leading targets.

With the formation of Asean Economic Community (AEC) set to come into effect in 2015, Thai businesses must adopt strong anti-fraud and anti-bribery measures, Vorapong said.

“Obviously, fraud has an adverse impact on every company’s bottom line and becomes embedded as a cost of doing business. To remain competitive and ready for the AEC, loss due to fraud is a direct cost that companies must scrutinise,” Vorapong said. “Ignorance is just too expensive.”

Anti-corruption legislation, including the US Foreign Corrupt Practices Act (FCPA) and the UK Anti-Bribery Act are being rigorously enforced and the survey results show that companies need aggressive anti-corruption measures to protect themselves from prosecution and reputational damage.

“Companies don’t have the luxury of blaming lower-ranking managers, suppliers or local partners – they need to adopt company-wide anti-bribery rules and procedures,” Vorapong said.

Without stronger anti-corruption and anti-fraud measures, fraud risk is expected to rise in Thailand, he continued.

Cybercrime was also reported as a major threat, with 27% stating that frauds such as hacking were on the rise and 67% stating that risk remains the same. The finance sector was found to be vulnerable to IT-based attacks through trojans, viruses and worms, putting corporations and individuals at risk.

The survey found that asset misappropriation topped the list of reported frauds (68%), followed by bribery and corruption (54%) and anti-competitive behaviour (25%). The global survey polled 3,877 executives from 72 countries, including 79 from Thailand between July and November 2011.

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Notes to editors:

The full report on the survey results can be found at http://www.pwc.com/th/en/publications/2012/assets/gecs-th2012-for-web.pdf

About PwC

PwC firms help organisations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with close to 169,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/th

In Thailand, PwC has had a presence for more than 50 years. Our client base includes some of the largest Thai and multinational companies, as well as government institutions. Our close interaction with both economic and state bodies allows us to keep up with the fast-changing business environment. We have more than 1,350 people working for our Bangkok-based office.

About PwC Forensic Services

The Forensic Services Group of PwC’s global network of firms plays a leading role in addressing the life cycle of fraud and other avoidable losses, providing reactive investigative services and proactive remedial and compliance services to clients in the public and private sector.

Survey Methodology

The global survey polled 3,877 executives from 72 countries, including 79 from Thailand, between July and November 2011. The participants were asked to respond to the questions with regard to their organisation, and the country in which they are mainly based by completing an online questionnaire.

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