LETTERS: Malaysia has had its fair share of high-profile corruption and bribery cases in the near past.
The recently released Global Corruption Barometer (2020) (APAC) - Malaysia by Transparency International found that 71 per cent of respondents believe that government corruption is a big problem; 15 per cent used personal connections for public services during the course of the survey; 13 per cent paid a bribe for a public service; 12 per cent experienced sextortion or know someone who has and 7 per cent offered bribes in exchange for votes.
Corrupt practice includes the "offering, giving, receiving or soliciting, directly or indirectly of anything of value to influence improperly the actions of another party" (World Bank, 2013).
One of the toughest sectors to fight corruption is the banking sector, as its system collides with the most complicated forms of corruption and bribery.
Some of the corruption risk factors to consider in the banking sector include insider information, licensing of activities, monopolisation, issuance and execution of necessary documents, passing inspection and clear supervision of actions.
In a recent case, a former president and managing director of a development bank was detained by the Malaysian Anti-Corruption Commission (MACC) for allegedly receiving bribes estimated at RM8 million to approve a loan of RM400 million for a non-existent project.
A couple of months later, six bank employees were arrested for allegedly accepting bribes from personal loan applicants.
They were believed to have solicited and accepted bribes between 15 to 35 per cent from a total of 110 personal loans, worth around RM18 million. The most frequent fraudulent activities occur in the loan and mortgage departments.
Here we could see the bank staff solicit advantages from customers for approving unqualified loans or credit facilities, accept advantages for expediting loan applications, or extending loan repayment schedules, and writing favourable site inspection or assessment reports that would benefit the beneficiary.
The US banking sector saw mortgage units being the most heavily hit by corruption involving public and private organisations and individuals.
Some of the other schemes that take place in the banking sector include misuse of confidential information, facilitation of money laundering, abuse of power/conflict of interest and mismanagement of client investment portfolios.
Corrupt staff could accept advantages from outside parties, e.g. debt-collecting agencies, to conduct unauthorised checks on customers' personal data, accept advantages from unscrupulous businessmen for opening bank accounts without sufficient supporting documents, approving application for loans, letters of credit, mortgage, credit cards, etc, submitted by relatives or close friends, procuring tenders or quotations submitted by relatives and close friends, or solicitation of unauthorised bonuses or commissions from clients for managing the clients' investment portfolios.
Due to a multifaceted structure of the banking sector, corruption-related investigations and risk assessments are very complex.
The various departments, financial product offerings and types of customers would require a proactive approach to managing the risk of financial crime, specifically risk of corruption and bribery.
Business- and relationship-based risk assessments are key to a sustainable control environment.
Top executives would need to focus on people, technology and process/procedures towards risk mitigation and strategic management.
Proper governance, continuous training and awareness for staff, use of technology and system-based monitoring, due diligence of persons associated with the organisation, along with the right policies and procedures would mitigate the risk of corruption and bribery.
RAYMON RAM
Certified Fraud Examiner (CFE)
Certified Anti-Money Laundering Specialist (CAMS)
Petaling Jaya, Selangor
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times