Fraud is simply wrongful or criminal deception intended to result in financial or personal gain. In general there are two types of frauds; 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 organisation 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 that is common in the developed countries.
In Myanmar, may be due to lack of education and analytical skills, Ponzi or pyramid schemes, and fraudulent investment opportunities still occupy the top three list together with advance fees fraud. As recent as less than six months
ago, millions of $ 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 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 send you a copy of the ticket (she keeps the original), after collecting the sale proceeds. How gullible Myanmar people are!
Occupational Frauds
Typical occupation frauds include asset mis-appropriation, corruption and frauds in reporting. Occupational fraud occurs in most organisations here, be it the government or commercial entities. Asset misappropriation is more common in business organisations and the latter two more so in public sector.
Inventory, cash collections, expense claims, cash handling and safe keeping are typical areas that companies have to be extra careful 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 hand outs. Then there is manipulation of statistics to satisfy the authority above, at the detriment of the top unable to have a factual view of the genuine state of affairs.
Why do these fraud happen?
In order for occupational fraud to occur, the three angles of the fraud triangle must be complete: unsharable pressure, opportunity and rationalisation. Anyone of them missing and you will not have a fraud. So our duty as the heads of organisations would be to ensure that controls and monitoring mechanisms are in place, to consistently ensure that one of the leg of this tripod is always missing. Then you would be safe.
For consumer frauds, as long as there are bad people out there (assuming the world is 50% good and 50% bad), there would be people attempting to defraud others for easy money. In Myanmar, gullible population, lack of education and donation orientation are continuing to contribute 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 frauds?
There is the whole series of books writing about preventing occupational frauds. Prevention is the best solution. Prevention is done via putting in place a number of internal controls within the organisations. In a high power distance culture like
in Myanmar, one cannot assume that a 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 of over claim in expenses may make a difference to the income. One has to be aware of these two factors.
Tough penalties are another way to deter frauds, be it occupational or consumer. Weak or little punishment just encourage others to venture into dipping ones 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 bad habits might come a long way in determine who to trust and who to chuck. For consumer frauds, 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 hard pressed to pay even 3% monthly (let alone 5-10% advertised) pay off to investors even for a year. 3% per month means at least 36% per annum, in dividends. Then the company must be growing at around 50% at profit level. If there exists such a company, the company would be larger then the economy of the country within one generation lifetime, knowing that the country economy only grows only 3-5% per annum. How would that be even remotely possible!
