Corporate Financial Crime Investigations in Philippines: Growth Rate Slows Down as Economic Crimes Increase

The Philippine economy’s growth rate has slowed down significantly, reaching 5.9% year-on-year in 2019, the lowest since 2011. Despite this slowdown, economic crime and fraud continue to surge, with at least one out of two businesses reporting losses ranging from $5 million to $50 million over the past 24 months.

Asset Misappropriation Fraud Remains a Concern

According to PwC’s 2020 Global Economic Crime and Fraud Survey - The Philippine Report, asset misappropriation fraud remains the most disruptive type of economic crime in the Philippines, affecting 26% of businesses since 2018. Bribery and corruption also pose a significant threat, with 21% of respondents reporting an increase in instances over the past 24 months.

External Perpetrators Contribute to Staggering Losses

The survey revealed that external perpetrators may have contributed significantly to the staggering losses, with 50% of fraud incidents involving external actors compared to 20% in 2018. This suggests that businesses should prioritize strengthening their internal controls and implementing anti-fraud frameworks.

Internal Fraud Decreases, but Economic Crimes Persist

While internal fraud has decreased significantly, from 67% in 2018 to 38% in the latest survey, economic crimes and fraud continue to have a profound impact on businesses. At least one out of three respondents reported feeling frustrated, anxious, and stressed due to these incidents.

Businesses Take Steps to Combat Fraud

Despite these challenges, Philippine businesses are taking steps to address enterprise-wide risk by investing in internal controls, enhancing policies and procedures, and implementing anti-fraud frameworks. Twenty-six percent of respondents plan to increase funding dedicated to combating fraud over the next 24 months, while 35% intend to maintain current levels.

Corruption Perceptions Index Highlights Concerns

The results mirror the annual Corruption Perceptions Index by Transparency International, which saw the Philippines’ rank drop from 99th to 113th. Businesses operating in the Philippines may be more likely to consider paying bribes as a viable option to win business, posing an imminent threat to the country’s economy.

Importance of Investigations into Corporate Financial Crimes

Investigations into corporate financial crimes are crucial to maintaining the resilience of the Philippine economy. The government and regulatory bodies must work together with businesses to strengthen oversight functions, improve evidence collection, and enhance whistleblower protection networks to combat economic crime and fraud effectively.

Key Takeaways:

• Economic crime and fraud continue to surge in the Philippines, despite a slowdown in growth rate.
• Asset misappropriation fraud remains the most disruptive type of economic crime.
• External perpetrators contribute significantly to staggering losses.
• Businesses are taking steps to combat fraud by investing in internal controls and anti-fraud frameworks.
• Corruption perceptions index highlights concerns about bribery and corruption.