Case :fraud

Kuala Lumpur, Saturday – One of the last 3 sessions at the MLC focused on fraud and the ways to detect and prevent it. Moderated by YA Dato’ Mary Lim Thiam Suan, the panellist includes Christopher Leong, a practitioner, Vorapong Sutanont, Director in the Advisory Services Department at PricewaterhouseCoopers, and Ng Jern-Fei of the Essex Court Chambers in London.

Christopher Leong started the session by asking participants, “How do we define fraud?” Fraud comes in various forms and shapes; therefore it is not unusual to have 10 definitions of fraud. He then went on to explain that fraud can be grouped in 2 broad areas – the public area and the private area.

In the public area, fraud refers to fraudulent acts and activities concerning or involving public institutions and the government. The term ‘corruption’ is more often used to describe all types of dishonest and deceptive acts, including the abuse of power or office. In Malaysia, the government is involved in business. This creates an atmosphere where fraud can easily occur. The government as the policy-maker is able to access all information such as the budget and when to refloat the currency.

Fraud in the private sector usually involves public listed companies. Christopher identifies 4 categories of people that commits fraud involving a company – the customers, suppliers, employers and those in the higher management. Some of the fraud detection and prevention measures that should be placed in the private sector include having a strong work culture and ethic (to create loyalty), strong corporate governance culture and structure, internal controls of processes, internal audit and whistleblower procedures.

Varapong gave his view on fraud from the forensic investigators perspective. In 2009, PricewaterhouseCoopers conducted an economic crime survey where almost 3,000 companies participated in it. Those surveyed included insurance companies, telcos and financial services providers. What the surveyed showed was that almost three quarters felt that work pressure is the most likely reason for a greater risk of fraud. If there is opportunity to commit fraud, people will take advantage of it. Job security is also another reason for people to commit fraud.       

Jern-Fei gave a 10-point checklist for civil fraud practitioners. First, is to consider the right forum to bring a fraud action. Fraud action can be court-based action or arbitral proceedings. He said that there is a common perception that the only viable method is court-based but the advantage of an arbitration procedure is enforcement as arbitration awards can be enforced across jurisdiction. Second, is to look at the proper law before filing the claim. Practitioners need to know that there is no conflict of law when fraud action is filed. Third, is to unmask the perpetrators. This is difficult to do, but one can use the ‘Norwich Pharmacal’ approach to do this. Jern-Fei however cautioned that this approach should be used as a last resort. Fourth, is to look at interim remedies pending the disposal of the fraud action. This includes getting a Mareva injunction or an Anton Piller order. Fifth, is to consider the other disclosure remedies that can be obtained such as electronic disclosures. Sixth, is to consider the burden of proof to be applied. Different standards of proof apply to civil and criminal fraud. Seventh and eighth is to look at the primary and secondary liability. The other checklist is to look at recovery of damages. And last but not least, practitioners must be mindful of the limitation period.

The session ended without any opportunity for a questions and answers segment as some of the participants and members of the audience wanted to attend the much anticipated talk by Dato’ Seri Anwar Ibrahim.

MY COMMENT

Fraud is a serious offence and this crime is increasing in our nation. Fraud can be defines in many ways and can occur in many places like public,working environment and etc.As state above,fraud act should be consider as a serious act and legal action should be taken.