E&Y figures highlight bribery and fraud risks in Indonesia, Malaysia and Singapore

An Ernst & Young (E&Y) survey of staff and senior executives operating in several Asia-Pacific countries has highlighted the risks created by weak internal controls and compliance programmes, pressure to take shortcuts, and a rise in fraudulent practices.

Building a more ethical business environment is E&Y’s first APAC-specific fraud survey. Asia-Pacific leader of E&Y’s fraud investigation and dispute services practice, Chris Fordham (pictured), said that it questioned 681 executives, senior managers and working-level employees on issues relating to fraud, bribery and corruption in the countries in which they operate. “All participants of our survey are employed at corporations with a turnover in excess of $500m equivalent and the industries covered range from industrial to financial services, from retail to natural resources,” Fordham said.

The survey also asked what steps were being taken to mitigate risks in this area. “It is clear that the majority of businesses surveyed have created or are in the process of creating policies and procedures to deal with fraud, bribery and corruption,” Fordham said. “However, too often we see a disconnect in the local application of these policies and tools.”

The respondents, all of whom were based in Australia, China, Indonesia, Malaysia, New Zealand, Singapore, South Korea and Vietnam, raised three key issues. First, that internal controls and compliance programmes were not implemented as thoroughly as they should be. Second, that the slower growth environment was creating pressure to take shortcuts. Last, that fraudulent practices were on the rise.

Hong Kong-based Fordham said that a key question for companies was how to effectively mitigate these risks in markets that were highly competitive and in which companies frequently suffered from weak control environments. “Not surprisingly, we find that in markets where enforcement of anti-bribery/anti-corruption (ABAC) laws is more rigorous, the risks are perceived to be reduced,” he said. “However, our survey highlights that companies’ own efforts are lagging, since close to half of the respondents said that the policies are good in principle but do not work well in practice.”


In Indonesia, 36% of survey respondents said it was commonplace to use bribes to win contracts in their industry, while 79% noted there should be more supervision by regulators and government. Almost a third of those polled said that bringing forward recognition of revenue or reducing depreciation costs was common practice.

E&Y’s fraud investigation and dispute services partner in Indonesia, Amien Sunaryadi, said that a decentralised system of government in which regional bureaucrats often solicited bribe payments to assist companies in the normal course of their duties was a major obstacle. A lack of regulation relating to the bribery of private individuals in the commercial sphere was another. “Although the legislative requirements are not as strict on companies operating in Indonesia as compared to developed markets, we believe companies should proactively implement the same systems and controls in their subsidiaries as in their parent company as this leads to greater stability for the company in the long run,” Sunaryadi said.


More than a third of respondents in Malaysia said that bribery and corruption practices happened widely in their country, 51% said that internal audit was the best way to proactively detect fraud, and 21% indicated that they were not confident with their company’s existing internal procedures to detect fraud.

E&Y’s fraud investigation and dispute services partner in Malaysia, Joyce Lim, said that with laws against bribery and money laundering, as well as the Whistleblower Protection Act, improvements were anticipated as Malaysia facilitated protected disclosures and shielded whistleblowers against retaliatory action from employers through criminal sanctions. Companies could benefit from a well-instituted scheme governed by clear rules and protections, Lim said. “The role of whistleblowers in the fight against corporate fraud is becoming more apparent and key to curbing corruption,” she added. “The Whistleblower Protection Act will enable whistleblowers to be protected and we expect that more will come forward to raise issues relating to corruption, misconduct, breach of trust and irregular activities.”


In Singapore, 59% of respondents said that their organisation’s anti-bribery and corruption policy was good in principle but did not work well in practice. Only 18% of Singapore respondents said that their management has strongly communicated their commitment to their ABAC policy, compared to the Asia-Pacific average of 35%. Furthermore, only 14% of respondents reported that they had received annual training on their ABAC policies, compared to the Asia-Pacific average of 27%.

Fraud Investigation & Dispute Services Partner at Ernst & Young LLP, Lawrance Lai, said that a consistent and clear tone at the top and employee education must go hand in hand with a robust anti-fraud and compliance plan that incorporates whistleblowing schemes. Technology such as forensic due diligence to monitor transactions in mergers and acquisitions was also important, Lai said, as were forensic data-analysis techniques to detect fraud.

“The last few years have shown us that companies need to focus on compliance during tough times,” he said. “Yet, during such times, cost may be a concern and many question the spending on compliance programmes.

“If companies really want to look at ways they can reduce their exposure to fraud and corruption, they should be looking at it as an ongoing priority and addressing it holistically and proactively across all levels of the organisation.”