A ground-up view of skyscrapers in Singapore's downtown district, November 7, 2017. Photo: iStock/Getty Images
A ground-up view of skyscrapers in Singapore's downtown district, November 7, 2017. Photo: iStock/Getty Images

For all its obsession with chewing gum-free law and order, Singapore has seen a spike in its crime rate — at least for economic crimes.

The percentage of businesses in the wealthy island-state that reported they had been victims of fraud has more than doubled so far this year compared to recent years, according to a new study from top consulting and accounting firm PricewaterhouseCoopers (PwC).

So-called economic crimes included in the report run the gamut, from outright bribery or embezzlement, to the humdrum frequency of accounting fraud, to even lies in advertising.

“Fraudsters continue to use opportunities and control gaps created by [a] fast-changing business environment and technological sophistication,” said Chan Kheng Tek, a forensics leader at PwC Singapore.

PwC’s poll, published earlier this month, showed 35% of companies in Singapore have faced or experienced business fraud, up by more than 50% from two years ago, the last time the survey was conducted. PwC said the 2018 fraud figure represents a new record high.

The island nation known for its squeaky clean reputation offers a unique case study. On one hand, it has a clean facade, with high civil servant salaries that seemingly keep graft minimal and an enviable ranking of No 6 on Transparency International’s latest Corruption Perceptions Index (with No 1 having the least corrupt reputation and No 180 the worst).

Singapore, Singapore - May 21, 2016: silhouette of Merlion Statue at Marina Bay against the sunrise. Merlion is a well known marketing icon of Singapore depicted.
Singapore’s iconic Merlion statue at Marina Bay. Photo: iStock/Getty Images

On the other hand, Singapore ranks at No 5 on the 2018 Financial Secrecy Index compiled by the Tax Justice Network, a nonprofit group that advocates against tax avoidance. This is one comparative ranking, obviously, on which countries do not want to top the list.

Singapore’s financial opacity has attracted the banking business of believed corrupt actors such as the military generals of Myanmar and the mining tycoons of Indonesia. In 2017, for example, when Jakarta requested citizens to bring their money home from abroad in a tax amnesty, much of the repatriated funds flowed from Singapore banks.

A rising incidence of economic crime, though, does not necessarily translate into a rising trend of corporate criminals in Singapore – or even necessarily a corporate culture that tolerates malfeasance if it pads profits. Indeed, blatant kickbacks and pyramid schemes are more likely to occur in nearby Southeast states like Malaysia, Indonesia and Thailand.

There are several plausible explanations that might underpin the seemingly alarming criminal data on Singapore. First, multinational companies have increasingly made Singapore home to their regional headquarters, from where they report on illegal activity or corrupt practices uncovered at their offices further afield.

Second, survey participants reported experiencing not participating in fraud, which can arise from either external or internal actors, or both. For instance, if a firm is hit with a cyberattack from outside hackers, it is usually, though not always, guilty of any wrongdoing itself.

Third, it appears that big businesses are becoming more aware of and sensitive to internal misconduct and better equipped to detect it.

Network business connection system on Singapore smart city scape in background.Network business connection concept
Concept of business networks juxtaposed on Singapore’s skyline. Image: iStock/Getty Images

Indeed, Singapore jumped six places to 5th worldwide on AT Kearney’s recently released Global Cities Outlook 2018, an annual survey that ranks global cities on economic performance, livability and quality of life in a holistic assessment of their capabilities and potential. It ranked second worldwide on the survey’s “economics and governance” ranking.

That all said, Singapore is certainly no innocent bystander to economic crime. Stories periodically crop up in the media of companies fudging paperwork to underpay migrant workers, or letting contraband pass through to third countries as long as Singaporeans themselves are not tainted by the pass-through.

Financial hub status has also brought with it financial shenanigans. In March, the Monetary Authority of Singapore, the central bank, fined Standard Chartered bank S$6.4 million (US$4.8 million) for transferring client funds from Guernsey, a tax haven, to “possibly” dodge financial reporting laws.

“MAS requires financial institutions to adequately assess money laundering risks when deciding whether to accept customers,” the agency’s deputy managing director Ong Chong Tee said of the Standard Chartered case. “They should also have in place good systems and processes to monitor customer transactions.”

Singapore is grappling with corporate violations at a time of increased focus on regional corruption. In Southeast Asia, there is often a political tinge to criminal corruption accusations and inquiries that sometimes puts Singapore as the region’s banking hub in a tricky middle position.

Malaysia's Prime Minister Najib Razak with Singapore's Prime Minister Lee Hsien Loong (R) in Singapore in s file photo Reuters/Edgar Su
Malaysia’s then Prime Minister Najib Razak with Singapore’s Prime Minister Lee Hsien Loong (R) in Singapore. Photo: Reuters/Edgar Su

That’s perhaps most visible in neighboring Malaysia, where Singapore is involved in probing the unrivaled multi-billion dollar 1Malaysia Development Berhad (1MDB) money laundering scandal associated with ex-premier Najib Razak. (Najib has consistently denied any wrongdoing).

While the scandal is under investigation in several countries, some have questioned whether Singapore has pressed as hard as possible for answers considering the chummy ties between Najib and Singapore premier Lee Hsien Loong. One of new premier Malaysian premier Mahathir Mohamad’s moves was to cancel a planned high-speed rail linking Malaysia to Singapore initiated by Najib and Lee.

In Indonesia, the newish Corruption Eradication Commission (KPK) has survived multiple political attempts on its life. Many of its investigations, including into massive parliamentary graft in an electronic identity card scam, has exposed illegal ties between the private and public sectors.

As the tax amnesty case demonstrated, wealthy Indonesians favor Singapore-based banks for hiding their ill-amassed gains.

New global corporate standards, from US rules that demand foreign banks hand over details about American customers, to an OECD project that requires scores of countries to share their tax data to curb evasion, are also forcing Singapore to tighten its compliance as a financial hub.

The skyline of Singapore's central business district seen from a public housing estate, April 14, 2015. Photo: Reuters/Edgar Su
The skyline of Singapore’s central business district seen from a public housing estate, April 14, 2015. Photo: Reuters/Edgar Su

While corporate controls to fight economic corruption are myriad, economic crime is nonetheless accelerating in Singapore, the PwC survey shows. PwC recommends taking advantage of artificial intelligence to set up tracking systems, including computers that learn to recognize data patterns in business operations and alert management to anomalies.

“In Singapore, detection of the most disruptive frauds through the use of suspicious activity monitoring appear to be at a much higher level compared to the global average,“ Chan said. “It is encouraging that Singapore-based organizations are spending more resources than their global counterparts to respond to fraud incidents.”

Companies could also review their incentive structures to understand how they might be encouraging staff to make questionable business decisions. And there are always the tried and true old methods from rotating personnel and requiring second signatures on vendor payments, to routine audits and anonymous tip hotlines.

Singapore may not be a lawless island teeming with criminal elements, but the PwC survey shows that economic crimes persist in areas where it appears or in fact no-one is looking.