Thai procurement fraud on the rise, PwC says

Stocks and Financial Services Press Releases Friday March 10, 2017 10:10
Bangkok--10 Mar--PwC Thailand
Businesses in Thailand should pay close attention to third party relationships as part of their efforts to limit exposure to financial crimes and to combat corruption, PwC Thailand says.

Vorapong Sutanont, Forensics Partner of PwC's Consulting practice in Thailand, speaking at the first ever PwC Forensics Summit, said that while employees are the most common perpetrators of fraud, they often use third party vendors to carry out their schemes.

"PwC's latest economic crime survey shows that procurement fraud has been on the rise in recent years, with almost a quarter or 23% of companies globally reporting being affected by it in 2014-2015.

"Procurement fraud often results from employees colluding with vendors, and this collusion often starts during the vendor selection process. It's really important that companies extend their due diligence efforts to include any potential or existing third party relationships.

"If companies get it right at the vendor selection stage, with the help of appropriate background due diligence, it can go a long way to reducing the risk of fraud down the track in the tender, procurement and payment processes," Vorapong said.

Some 93% of the companies participating in this year's Summit said it was likely that they would experience procurement fraud in 2017-18.
Vorapong, who has years of experience advising clients in Thailand, said third party vendors and other business partners could also expose companies to the risk of prosecution for involvement in corruption.

He cited an Organisation for Economic Co-operation and Development (OECD) study that showed that of the 427 foreign bribery cases resolved globally since 1999, 75% involved improper payments made through third-party intermediaries.

Companies operating in Thailand are not immune. The country recently ranked 101st out of 176 countries on Transparency International's 2016 Corruption Perceptions Index, only one position away from its worst ranking in 2013.

"That puts us far behind four of the BRICS and sanctioned Cuba. It's not good enough for a country that is positioning itself as an attractive destination for foreign investors," Vorapong said.
The PwC Forensics Summit brought together financial crimes experts from the public and private sectors to share their visions and practical approaches to combating this ever-present threat.

Attended by C-suite executives from Thailand's leading businesses, the first-of-its-kind event focused on nurturing a strong financial crime fighting culture. Key to this is more vigilant systems and extending due diligence beyond customers to include employees and third-party relationships.


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