White-collar crime (e.g., bribery, forgery, fraud, insider trading, embezzlement, etc.,) can have a huge impact on a business and its stakeholders. A business ‘health check’ in the form of misconduct control systems can help protect a company from the possible severe consequences of white-collar criminal activities. Establishing certain control systems can serve as a deterrence to criminal activities, whether they occur knowingly, or by accident. This article will discuss advisable fraud control systems comprising prevention, detection, and response to potential or actual white-collar crime in Thailand.

Prevention: Criminal theory states that three factors behind the commission of crime are: 1) a desire to commit a crime; 2) a target of such desire; and 3) an opportunity for the crime to be committed. Thus, prevention of white-collar crime involves deterrence to reduce the desire and opportunity to commit such crime. Deterrence to reduce the desire to commit fraud, for example, may be achieved through establishing a vigorous anti-fraud policy or code of conduct that requires each employee’s acknowledgement. Employee background checks, and segregating duties to ensure checks and balances are in place can also help prevent white-collar crime.

Detection: Detection serves as a second level mechanism for crime control measures that should be implemented upon indicators of criminal activities. Examples of indicators of fraud include excessive movements of cash funds; goods/services purchased with no value-added tax; multiple vendors with the same contact details; employees’ sudden change in economic status; excessively high staff turn-over; missing procurement documents; unauthorized changes to work practices; employee's gambling or drug use, etc. Such indicators should act as a warning sign of a risk of fraud and trigger closer monitoring or informal review of processes and investigation, respectively. Investigations should be conducted by third-party lawyers, preferably litigators, since their role includes gathering relevant facts in order to provide legal advice on: potential criminal, civil, or regulatory exposure; any necessary remedial action; advisable course of action in imposing discipline on any wrongdoers; whether the incident should or must be disclosed, and how to disclose an incident to the government, regulator, the company’s shareholders, or the public. An investigation should aim to: collect information and (physical or electronically stored) documents; interview witness to elicit and preserve useful information; give advice as to whether forensic accountants or experts should be retained.

Response: Options to penalize offenders and recover losses include public or private prosecutions. The pros and cons of available options can be discussed with litigators.

Waree Shinsirikul
Partner, Head of Dispute Resolution

E: waree.s@mhm-global.com

Chandler MHM Limited
17th and 36th Floors
Sathorn Square Office Tower
98 North Sathorn Road, Silom, Bangrak
Bangkok 10500, Thailand

W: www.chandlermhm.com