Corporate Fraud Investigations in Thailand
We perform some aspects of corporate fraud investigations. We provide expert analysis of situations, surveillance of employees and company vehicles such as discreetly following them, computer system forensics, security cameras, and various other services.
Many foreigners are not accustomed with how things are often done in Thailand, and sometimes miss clues. As our American Managing Director his been living and working in Thailand since 1994, and some of our Thai staff have decades of work experience including in senior managerial positions in a large company, we have experience in recognizing and dealing with issues.
Corporate fraud happens in all countries, of course, and Thailand has its good side. Many Thai people are ethical and can be trusted. However, it is common for foreigners to miss the signs of tricky Thais because the Thai culture has many polite customs and mannerisms, which some Thais use to help cover their real intentions and behaviors. It can work more effectively against foreigners.
PWC (Price Waterhouse Coopers) in their 2018 survey found that 49% of organizations globally responded that they had been a victim of fraud over the past 2 years, whereby 52% of frauds were perpetrated by people inside the organization. That's pretty bad, but also consider that this is probably underestimating the amount of fraud because a lot hasn't yet detected or proven fraud. After all, fraud is often carefully hidden.
Most companies operate on relatively slim profit margins. While fraud may take away a relatively small percent of the money a company makes, it can take a huge bite out of a small profit margin. In some companies, fraud can turn what would be a profitable company into a failing company.
The most common kinds of suspected behavior and/or results in Thailand include:
- theft and embezzlement by employees -- money, outgoing products, incoming supplies, and equipment used by the company
- employees setting up a competing business -- including some high level Thai partners of foreigners
- the sale of information to a competitor, such as the identities of major customers
- collusion between staff and contractors with price rigging and kickbacks (overpricing and/or substandard products/services)
- forged documents and faked receipts
- people on the payroll who aren't actually there, or fake overtime
There are actually a wide range of findings in corporate fraud investigations, but the above are relatively common.
A case may start simply because a company is not making the amount of profit expected, or the customer base is not expanding as planned (especially big customers), or there are gaps in reports, or some things don't make sense, or anomalies are observed, or there is just a gut feeling that something isn't right.
There are two common approaches:
- An overt and pressing inquiry and/or crackdown to audit and gain more control by brute force, or
- Pretend to be oblivious for awhile longer, so any perpetrators may remain complacent or even get more daring, and try to detect fraudulent activity
We often recommend the latter at the beginning, but an investigation be implemented as quickly as possible, so that any additional short term losses are minimized, and in order to maximize the long term benefits. You don't want crooks to remain in your company; you want to detect and catch them and cut them out.
Thieves and embezzlers are often not very careful about how they do things, especially in a lax environment where it is easy to get away with things. Complacency, carelessness, and recklessness are very common. They often live well beyond their means as can be seen from observations outside the workplace. As long as they are oblivious that anybody suspects anything, they are often not too difficult to detect and catch. However, once they find out that somebody is suspicious, then they can quickly become much more careful, may pause their fraudulent work for awhile, and cover up evidence.
Normally, we are looking for major, systematic fraud based on greed, by people in positions of responsibility and power, not so much for petty little things, and have a holistic outlook.
It is very important to have systems in place eventually to audit things, and to deter potential theft and embezzlement. However, it is best to identify and remove thieves and embezzlers, rather than try to control them. There are too many ways that somebody unscrupulous can damage a company out of their own greed over time. They may also recruit others and spread their cancer. You might have more than one group within your company, more than one tumor. It is usually important to try to identify them as soon as possible and extract them.
In some cases, the two can go together if a new system of auditing or control is rolled out carefully. First, we may identify suspects and catch as many as we can before any announcement of auditing or control, while they are still complacent and perhaps reckless. Secondly, we can observe behaviors immediately after an announcement or the first steps are taken for auditing and control, as suspects may react by taking measures to quickly cover up things or meet onsite or offsite to discuss things with those in collusion thereby possibly identifying additional suspects we may not have detected before. Thirdly, of course, once a system for auditing and control is in place, it might be used to detect ongoing fraud.
If you can collect evidence of wrongdoing, then you can terminate employment without severance pay, and possibly get reparations as well as set an example for any other employees who might otherwise consider stepping over the line. Many crooked people will simply leave and seek softer targets elsewhere, once they see somebody get caught.
(If somebody is strongly suspected but you just did not get evidence, then you might want to transfer them to another position where they cannot do damage like before.)
Unfortunately, in large companies, there is often collusion between employees.
Fraud has been very widespread in foreign branches of very large company, especially if Human Resources staff are complicit.
Step 1 is actually to take a step back, stay quiet and talk to nobody within the company until you have thoroughly analyzed the situation. In many cases, this is where I come in as an outside, entirely independent consultant.
If you raise the topic of potential fraud, you must choose very carefully who you mention it to, and make sure than they can keep the discussion compartmentalized so that the investigation remains as secret as feasible, for as long as reasonable.
For example, in many companies in Thailand, there are people in Human Resources (HR) who abuse their position by hiring cronies and stacking key parts of a company which offer great potential for embezzlement and kickbacks.
It is much like many government positions in corrupt countries, which are coveted for their potential for gathering under the table money. Thailand is one of those countries well know for this, and it's still accepted by many people in Thai culture shamelessly.
Many people seek positions not just for the salary but for their potential to make a lot of extra money on the side by abuses of their position, and they usually are promoted by loyalty to a superior rather than their competency.
There are two methods for detecting fraud or questionable behavior:
- Technical means -- security cameras, computer forensics, auditing
- Human methods -- discreet surveillance, undercover interactions, informants
On this website, I won't expand much on the human methods, as those are best discussed in person and in the context of your particular company and situation. However, I will say that potential informants are often unwilling to take risks in coming forward to report fraud with a particular person high up in a company, for various reasons, but they can be a highly valuable key to detecting and catching fraud, and a connection can be made to potential informants by certain methods, discreetly and securely.
Besides investigative work, the American Managing Director of our company has decades of other experience in a wide range of jobs in which theft, embezzlement, and fraud have been observed. Some companies and organizations have been very clean with a good internal culture and no known fraud, whereas others have been problematic with suspected and observed fraud. His jobs have covered a wide range, from low level work as a teenager to federal government work, as well as a lot of consulting to Thailand branches of multinational companies, and his own entrepreneurial companies. Originally a scientist (physicist), he was an I.T. consultant and entrepreneur going back to the 1980s, and has worked in a wide variety of positions as a multi-disciplinary analyst, manager, troubleshooter, and the person looked to for creative solutions. This is the basis of motivating him to enter the field of fraud investigations, after observing the need (which companies may or may not fully recognize) as well as flawed ways in which some companies have tried to address the situations internally themselves. Experience and skills can be crucial to achieving the level of success you need.
Fraud affects a lot of people both financially and in terms of morale -- staff, their families and dependents, and the visionary owners and managers who make the necessary commitment.
All that can be brought down by one or a small number of greedy people who lack ethics and don't care about the Greater Good.
At the first sign of problems, it's better to deal with it sooner than later.
Please feel free to contact us for a free, no obligation initial discussion and assessment.
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Thailand Private Investigations,
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Lucky Lion Pride Co., Ltd.
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81 Sukhumvit soi 2
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