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Corporate Fraud In The Philippines Is Usually An Inside Job

July 12, 2018

Via Wikimedia Commons.

The reality of business risk in the Philippines is a stark contrast from the impeccable public image its largest private sector enterprises cultivate. If it’s up to John Walker, a veteran special investigator and founder of Adsum Risk Consulting (ARC), experience has taught him that most financial crimes involving businesses are done by employees. The public record backs him up.

Investors need to constantly re-examine their strategies if they’re entering an emerging market in Southeast Asia. When the rule of law and regulatory institutions are often lacking, their assets and money are at extreme risk. Here are a few horror stories from the Philippines.

In 2017 the Philippines’ financial sector suffered from severe reputational risks as enormous internal frauds were discovered by authorities. One of the biggest scandals involved Metrobank, a respected institution with a heritage going back half a century, and an unscrupulous vice president. Over many years, it turned out, the rogue VP was funneling loans to bogus accounts listed under a client’s name. When the suspect was finally seized by authorities in a sting operation it was uncovered that she had siphoned almost a billion pesos from the bank.

This wasn’t just financial crime committed on a grand scale, it was a poignant lesson for business leaders everywhere. Crime knows no boundaries and even the most trusted people who’ve devoted their careers to the firm can go astray.

In 2016 another esteemed financial institution, the Rizal Commercial Banking Corporation or RCBC, was caught up in one of the most elaborate cyber crimes ever perpetrated in Asia. The bank came under fire when it was found out millions of dollars stolen from Bangladesh’s own central bank was transferred to suspicious local accounts in a specific RCBC branch. The manager of the branch immediately became a prime suspect as a vast conspiracy took shape in the public eye.

If there’s a lesson to be learned from the RCBC “affair” it’s the personal foibles of trusted employees. They may act loyal, but their own ethics are never fully accountable. Given the opportunity, they can–and will–endanger themselves and their employer if they’ve been seized by the lure of instant wealth.

For consulting giant PricewaterhouseCoopers (PwC) the threat posed by internal fraud and financial crimes targeting business is too grave to ignore. “Long gone are the days when it was viewed as an isolated incident of bad behavior, a costly nuisance, or a mere compliance issue,” writes Didier Lavion in PwC’s latest Global Economic Crime and Fraud Survey. “It can almost be seen as a big business in its own right…think of it as the biggest competitor you didn’t know you had.”

Companies in the Philippines need to have credible strategies in place for combating internal fraud. Aside from seeking help from in-house services offered by banks and insurance companies, another alternative is recruiting a business risk consultant with the right qualifications. With 30 years of experience serving private and public clients, ARC is a dedicated and flexible solution for the worst being in business can offer.

When it comes to internal investigations for uncovering suspicious activities, ARC’s own track record is substantial. With their expertise on the case, if a thieving accountant or manager needs to get caught, they will be. For companies who need a risk consultant right now, they can get in touch with ARC here.


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