Indonesia second-most fraud-prone country

The Jakarta Post/Asia News Network, Thursday, Oct 18, 2012

Indonesia, often cited as the fastest-growing market in Asia, remains chronically plagued by fraud according to a global survey that found that 65 percent of companies in the country have been affected by fraudulent practices in the past year.

The percentage is above the global average of 61 percent, throwing Indonesia, alongside China, the region's economic behemoth, into second place among countries where businesses are most impacted by fraud.

First place went to India, where 68 percent of companies surveyed admitted that they had been affected by fraud.

The study, conducted with more than 800 senior executives worldwide, was commissioned by Kroll Advisory Solutions with the Economist Intelligence Unit, and the findings published in Kroll's Annual Global Fraud Report.

"Our ground-level experience reveals that the major developing economies in the Asia-Pacific region are as corrupt and as fraud-prone as ever," said Tadashi Kageyama, Kroll Advisory Solutions's senior managing director for Asia.

The survey listed information theft as one of the most common forms of fraud in Indonesia, with 35 percent of respondents - the highest figure globally - claiming losses in this area.

"Fraud perpetrated against Indonesian companies also tends to originate from vendors; 27 percent of companies reported that a vendor played a leading role in fraud, compared to 17 percent worldwide," the Kroll report noted.

Information theft has also become the bane of companies worldwide, its prevalence declining slightly to 21 percent this year from 23 percent in the last survey. The US and Europe follow at Indonesia's heels in terms of information theft, with rates reaching 26 percent for both countries.

"Surprisingly, it is employees, rather than hackers, who are more to blame for the loss of information," the report mentioned.

Information technology (IT) analysts have previously pointed out that the growing trend of bring-your-own-device (BYOD), where employees utilize their personal devices such as smartphones and laptops for work, had unleashed issues concerning the security of company information.

Tom Hartley, Kroll Advisory Solutions president and CEO, said that companies, however, had taken action "in response to the myriad of external threats, leading to the overall decrease in the prevalence of fraud".

The study shows that globally, fraud concerns have eased. The number of respondents answering that they were moderately or highly vulnerable to information theft decreased to 30 percent from 50 percent, even though only 2 percent of companies reported having suffered from this type of fraud.

The findings, the report concludes, suggest that companies have grown overconfident regarding their vulnerability to fraud, which actually increases their risks.