Public sector fraud: the Malaysian perspective

Abstract

Purpose This paper aims to explore and compare the perception of public sector employees on fraud and associated fraud behaviours. Design/methodology/approach The population of this study comprised 44 managers from the Malaysian Federal government departments. The analysis was based on an open-response questionnaire using data-driven thematic analysis. This was based on the context and latent content of the respondents. The items in the questionnaire examined the perceived definition, actions and experience of corruption in their departments. Findings The findings revealed that respondents acknowledged that bribery as one of the central element of fraud. They recognise fraudulent behaviour and practice in their organisation together with sharing these experiences in the study. Common results indicate that leaders play a major role in shaping the organisation as they present themselves as a model to the mployees. From the human resource perspective, having multiple side businesses while being in employed in the government sector would heavily impact performance and accountability. Research limitations/implications Fraud is observed as a practice that needs to be addressed to improve government efficiency. The uniqueness was that the respondents acknowledged the existence of fraud and its implications through the activities of bribery, abuse of power and giving out favours. There is a need for organisations to focus on transparency and value to mitigate fraud. Practical implications This paper contributes towards the continuous effort in expanding fraud literature and human behaviour. The data obtained was distinctive in terms of the perspective of a developing economy and such fraud information and responses are different as compared to developed economies. Originality/value The empirical study of the public sector organisations enables important contribution towards effective public governance and administration. The results have important implications for preparing functional strategic management and controls for the public sector.

The Determinants of Indulgence in Corruption Among Law Enforcement Personnel in Malaysia

“…Individuals with low self-esteem, by comparison, usually use money to 'cover up' for their poor self-esteem (Jiang et al, 2015) and to require reputation and many possessions to identify themselves (Mogilner & Aaker, 2009). In addition, fundamental awareness of fraud is important in distinguishing a person from being an ethical or dishonest person, which could deter the possibility of corruption (Zahari et al, 2021). Sathappan et al (2016) explored the causes of bribery among law enforcement officers in Selangor.…”

Fraud Hexagon and Fraudulent Financial Statement: Comparison Between OMI and Beneish Model

“…Most hexagon frauds were tested in public sector organizations [6][7] [8]; only [9] examined publicly listed companies on the stock exchange. The difference is, this study examines all industrial sectors of companies listed on the Indonesia Stock Exchange (IDX) while [9] only examines the banking sector.…”

Determinants of Occupational Fraud in Government Procurement: Malaysia’s Public Sector Perspective

“…There are three main categories of occupational fraud, which are assets misappropriations, corruption & financial statement fraud. Malaysian public sectors are frequently confronted with issues of fraud involving senior leadership in relation to the corruption, abuse of power by leaders and criminal breach of trust (Zahari et al, 2021). The public procurement is defined as "the acquisition of supplies, services and works by the Government (Abul Hassan et al, 2020, p.1).…”

“…The report which also had demonstrated a significant alarming increase of arrested public officials by MACC. Zahari et al (2021) found that the Malaysian public sector is one of the sectors that have issues with the occupational fraud where there are cases involving top political leaders in the country, whereby the fraudster was found guilty by the High Court of Malaysia for committing fraud including abuse of power, criminal breach of trust, and money laundering belonging to companies that the Federal Government has the interest.…”

“…The factors contributed to the fraud would include lack of understanding about fraud behaviour, opportunity to commit fraud, lifestyle, and financial pressure due to low income (Omar et al, 2016). Other than that, public officials who accept bribes, using office assets for personal use, being dishonesty, stealing the small assets in the organisation such as stationaries and small value assets, abuse of power by leaders and personal favours for their own benefit have been regarded to be the determinants of fraud action in the public sector (Zahari et al, 2021).…”