Most Malaysian firms see bribery as part and parcel of doing business

Abu Kassim (2nd right) showing the KPMG report, With him are (from left) Hew, Johan and KPMG executive director of management and risk consulting Tan Kim Chuan.

PETALING JAYA- An alarmingly high percentage of Malaysian businesses, including a significant number of listed companies on Bursa Malaysia, see bribery and corruption as an "inevitable cost of doing business", a survey by KPMG Malaysia revealed.

"This type of mindset that fraud, including bribery and corruption, is part and parcel of doing business is rather dangerous," KPMG Malaysia managing partner Johan Idris said.

"It could result in the cultivation of a somewhat lenient and tolerant attitude towards the occurrence of fraud, with organisations merely reacting to fraud instead of taking proactive steps to nip it in the bud," he told reporters at the launch of KPMG's Fraud, Bribery and Corruption Survey Report 2013 yesterday.

While this is the fifth edition of KPMG's report, this is the first time it has included a section on bribery and corruption. The survey covers the period from January 2010 to December 2012 and was carried out between March 2013 and August 2013.

A startling finding was that 90 per cent of the 100 listed companies on Bursa Malaysia that had participated in the survey stated that fraud was part of the business cost in Malaysia.

"A whopping 71 per cent of respondents also believed that bribery and corruption was an inevitable cost of doing business, while 64 per cent believed that business could not be done in Malaysia without paying bribes," the report said.

"We have to recognise that there's a problem of corruption in this country… there's this element of corruption that we need to address," said Malaysian Anti-Corruption Commission chief commissioner Tan Sri Abu Kassim Mohamed, who delivered the keynote address at the launch yesterday.

He added that more education and awareness could help minimise fraud, bribery and corruption within Malaysian businesses.

"As a practitioner, we have looked at the results. We increasingly have to deal with much more in a complicated environment. The nature of fraud has increased; we have issues relating to intellectual property, identity fraud and so on. These may not have happened back in 2000. It is a combination of many factors," he said.

A majority 62 per cent of the organisations surveyed were from trading and services, consumer products as well as the construction industries.

From the 26 per cent who could quantify fraud loss experiences, the total figure was RM2.41mil, while generally, the survey indicated that 42 per cent of reported fraud incidents fell within the range of RM10,001 to RM100,000.

Although it might seem like a small amount, executive director of management and risk consulting Tan Kim Chuan believed that it represented a fraction of the actual cost of fraud, as many incidents went undetected or unreported.

Meanwhile, KPMG managing director of advisory Datuk Hew Lee Lam Sang said it was important that companies set up policies and procedures to curb occurrences of fraud, bribery and corruption. "Once those are set up, it is all down to cascading the information," he said.

Johan said that companies should implement e-tests to solidify and strengthen staff understanding of the respective companies' code of conduct and compliance.

"The e-test helps you to better understand what are the things you need to do. It basically ensures that you comply with the policies in terms of fraud, bribery and corruption. It's one of the more effective ways to instil good conduct," he added.