Employees lack trust in whistle-blowing system

Making a stand: Sridharan (left) and Tan at the press conference. PwC says in the report that employees do not feel supported or empowered to report issues.

PETALING JAYA: A multi-national company in Malaysia had a whistle-blower hotline that was unsued because the employees did not trust the system.

According to PricewaterhouseCoopers (PwC) Malaysia’s Global Economic Crime Survey 2016 (Malaysia report), the company received a number of anonymous reports, only after rigorous efforts of conveying the company’s stance on fraud to employees clearly.

“Too often employees tell us they do not feel supported or empowered to report issues. In order to effectively combat bribery and corruption, your employees are key.

“If not, your first line of defence becomes the weakest link, an opening easily exploited by would-be criminals,” PwC said in its report.

PwC Malaysia managing partner Sridharan Nair and PwC Consulting Services Associates (M) Sdn Bhd’s senior executive director and forensic lead Alex Tan released the report in Kuala Lumpur yesterday.

PwC said the multinational company provided training to all levels of employees, including senior management and had received numerous anonymous reports in the weeks that followed.

These reports were taken seriously and some were passed to PwC fraud investigators for independent investigation.

By collaborating with the whistleblowers, the PwC investigators were able to confirm and expose some serious issues in the company’s sales and procurement functions.

It said that more than one in three, or 37% of Malaysian companies fear they would experience procurement fraud in the coming two years compared with only 29% of companies globally.

PwC said an organisation’s procurement function was particularly susceptible to fraud.

This, in some cases, is due to few controls and lack of understanding of the risks by senior management.

“These departments tend to have a high level of autonomy and, in some cases, a lack of checks and balances that could prevent would-be criminals from exploiting their employer’s weaknesses,” it said.

“We also find that external actors, for example vendors or customers, play a large role in procurement fraud.

“This is reflected in our survey, with more than half of local businesses being victims of an external party’s criminal activities. However, external actors are nearly always assisted by someone within the organisation,” it noted.

The survey findings also suggested that many Malaysian organisations are not doing enough to protect themselves, with reported incidents of bribery and corruption increasing by 11% since 2014 to 30% this year.

Nearly all companies made it clear to their employees that bribery and corruption were unacceptable practices, however, 29% of respondents believe their companies would experience bribery or corruption in the next two years, the survey showed.

Even though bribery and corruption are on the rise many Malaysian organisations seem to underestimate the risks and appear to be ambivalent about addressing them.