FRAUD is simply wrongful or criminal deception intended to result in financial or personal gain. In general, there are two types of fraud; consumer and occupational. Both are extremely common in the country.
Consumer frauds relate to cheating the mass consumers or the general public, whereas occupational frauds relate to defrauding the organization using one’s occupation or position.Common Consumer Frauds
Typical consumer frauds in the world include advance fees fraud aka Nigerian fraud, banking relating frauds such as stolen passwords and IDs or fake signatures and identity theft which is common in developed countries.
In Myanmar, maybe due to a lack of education and analytical skills, Ponzi or pyramid schemes, and fraudulent investment opportunities still occupy the top three list together with advance fee fraud. As recent as less than six months ago, millions of US$ worth of funds were swindled from Myanmar by one company operating as an investment outfit in Singapore (run by Myanmar criminals) and one named Yangon Times Investment. People were promised returns between 5-10 per cent per month and they believed in this Facebook scam.
Yet, potential frauds are still ongoing starting from gold savings schemes, where you really do not know when the goldsmith shop would disappear into thin air, to selling lotteries from Thailand and Singapore, where the seller just sends you a copy of the ticket (she keeps the original), after collecting the money. How gullible Myanmar people are!
Occupational Frauds
Typical occupation fraud sinclude asset misappropriation, corruption and fraud in reporting. Occupational fraud occurs in most organizations here, be it the government or commercial entities. The former is more common in business organizations and the latter two more so in the public sector.
Inventory, cash collections, expense claims, cash handling and safekeeping are typical areas that companies have to be extra careful of here. Even pairing the staff might not necessarily provide sufficient control to prevent fraud. The two staff has to be at the same level and each of them must be willing to report the other for potential lapses.
As with most developing countries, corruption is also common within the public sector, from under-table payments to bribery to blatantly asking for handouts. Then there is the manipulation of statistics to satisfy the authority above, to the detriment of the top unable to have a factual view of the genuine state of affairs.
Why do these frauds happen?
In order for occupational fraud to occur, the three angles of the fraud triangle must be complete: non-shareable pressure, opportunity and rationalization. If anyone of them is missing you will not have a fraud. So, our duty as the heads of organizations would be to ensure that controls and monitoring mechanisms are in place, to consistently ensure that one of the legs of this tripod is always missing. Then you would be safe.
For consumer fraud, as long as there are bad people out there (the world is 50 per cent good and 50 per cent bad), there would be people attempting to defraud others for easy money. In Myanmar, a gullible population, lack of education and donation orientation are continuing to contribute to the widespread occurrence of fraud. Adding to that flame are lack of reach for law enforcement, lack of severity of punishment and lack of the punishment publicity, all three are not helping deter new criminals from committing the same crimes.
How do we prevent fraud?
There is a whole series of books written about preventing occupational fraud. Prevention is the best solution. Prevention is done by putting in place a number of internal controls within the organizations. In a high-power distance culture like in Myanmar, one cannot assume that fraud by a manager or supervisor will get reported by a junior staff, even though the staff may have witnessed it and knew it was wrong. When wages are low, even a little overclaim in expenses may make a difference to the income. One has to be aware of that too.
Tough penalties are another way to deter fraud, be it occupational or consumer. Weak or little punishment just encourages others to venture into dipping one’s toes into similar frauds.
We must be mindful to watch out for fraud red flags, nonetheless. From change in spending habits and change in office behaviour to knowing your staff’s bad habits might come a long way in determining who to trust and who to chuck. For consumer fraud, the premise is simple; if the deal is too good to be true, it probably is not! However great a company is it would be hardpressed to pay even three per cent monthly (let alone 5-10 per cent advertised) payoff to investors even for a year. Three per cent per month means at least 36 per cent per annum, in dividends. Then the company must be growing at around 50 per cent at profit level. If there exists such a company, the company would be larger than the economy of the country within one generation’s lifetime, knowing that the country’s economy only grows only 3-5 per cent per annum. How would that be even remotely possible!
#TheGlobalNewLightOfMyanmar
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