Financial Crime World

Seniority in Thailand: A Recipe for Fraud Prevention

Introduction

A recent study by PwC Thailand has shed light on the crucial role of seniority in the likelihood of junior employees reporting fraud or other illegal activities to their superiors. The survey found that employees are less likely to report wrongdoing when there is a sense of seniority and hierarchy within an organization.

Cultural Context: Respect for Authority

In Thailand, where cultural norms place great emphasis on respect for authority, this phenomenon can be particularly pronounced. The study found that Thai respondents tend to respond to fraud detection similarly to others worldwide, with 80% taking internal actions and a third seeking external legal advice.

Unique Aspects of the Thai Context

Rationalization vs. Opportunity and Incentive

The study highlighted some unique aspects of the Thai context. For example, it was found that rationalization, or the justification of wrongdoing, plays a small role in motivating fraudulent behavior in Thailand compared to other countries. Instead, opportunity and incentive are the primary drivers of fraud.

Waiting for Additional Frauds to Occur

The study also noted that Thai respondents tend to wait to see if additional frauds may take place before taking action, which is different from global trends. While using internal resources for fraud detection can be a cost-effective and efficient approach, it may not always be sufficient to resolve complex cases and could potentially lead to public exposure.

Punishment for Fraudulent Behavior

Lenient Approach to Punishment

In terms of punishment for fraudulent behavior, the study found that Thailand is relatively lenient compared to other countries. Thai respondents reported a lower percentage of tough and final punitive actions, such as dismissal or informing law enforcement, in favor of warnings and reprimands. While this approach may be seen as more humane, it can also contribute to a higher incidence of internal fraud.

Conclusion

The study highlights the importance of effective governance and transparency in preventing senior management fraud. Whistleblowing programs, which provide an anonymous vehicle for lower-level employees to report wrongdoing, are one key tool in this regard.

Contact Information

For more information on PwC Thailand’s economic crime survey or to discuss how our services can help your organization prevent fraud, please contact: