Monthly Archives: November 2009

Fraud Around The World

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PricewaterhouseCoopers has published its 2009 Global Economic Crime Survey, based on reports from more than 3,000 corporate executives in 54 countries.  The Survey is being widely reported, and considerable detail, including country-by-country reports, is available on the PWC website.  My objective is to highlight which countries have the most, and least, business fraud – from the perspective of each country’s own executives.  This gives you an idea of how, say, Russian or Singaporean executives view fraud in their own countries – based on their own reporting to PricewaterhouseCoopers.

2009 Global Economic Crime Survey

2009 Global Economic Crime Survey

Let’s begin with the bad news.  Russia is the worst, with 71% of Russian respondents reporting economic crimes.  They are followed by South Africa (62% reporting fraud), Kenya (57%), Canada (56%!), Mexico (51%), Ukraine (45%), United Kingdom (43%), New Zealand (42%) and Australia (40%).  Some surprising numbers, especially for Canada.  Do executives in these countries share the same definition of fraud?  I suspect that Canadian executives are using a higher standard than might be prevalent in the Ukraine.  And one wonders at the absence of the obvious suspects, such as Nigeria, Indonesia, Pakistan and China.  Did PWC simply not receive sufficient responses from these countries?

On the plus side, Japanese respondents see themselves as the least subject to corporate fraud (10%).  Next best are Hong Kong (13%), Turkey and the Netherlands (tied at 15%), Romania (16%), Finland and Switzerland (even at 17%), Indonesia (ah, here they are: only 18%), India and Singapore (also 18%), Sweden and Italy (19%).  Again, I think we are dealing with different subjective standards of what constitutes fraud and economic crime.  Is there really less fraud in Romania than in Singapore?  Lee Kuan Yew will not be pleased!

Weekend Hits

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Things you might find interesting, but I haven’t had the time or inclination to blog about:

  • A friend tells me about a novel use he has for Forbes‘ recent list of “The World’s Most Powerful People”.  He teaches English in China (I have been encouraging him to blog about it) and is using the Forbes list as a starting point for English conversations with his students.  He asks questions like whether or not Indonesia’s Yudhoyono or Singapore’s Lee Kuan Yew should have been included.  Should Italy’s Berlusconi be ranked so high?  He notes that out of the 67 names on the list, five are Chinese and one is a Hong Konger.  Thought provoking stuff and bound to get a conversation started.  Try it out at a dinner party.
  • Some lines of business seem like piracy, and the South China Morning Post (subscription necessary) found another one Monday.  The rampant piracy off Somalia has spawned a sub-industry of insurance companies, lawyers and negotiators worth perhaps $320 million a year.  Most practitioners are based in London, but it is a global business.  Despite pleas by the United States that ransoms should never be paid, ransoms are paid in almost every case.  Of course, U.S. policy was formulated to cope with individual kidnappings, not theft of multi-million dollar vessels and their crews.  Might make a difference.
  • Looking for a new line of business?  Here’s one that is challenging, takes you to an exotic place and is perhaps remunerative.  How about running a hospital or a utility in Iraq?  The U.S. Government is apparently getting worried that Iraq will be unable to maintain or even operate many of the development projects that the American taxpayer has funded as part of Iraq’s reconstruction.  Take a look at “U.S. Fears Iraqis Will Not Keep Up Rebuilt Projects” in the November 20 New York Times.  With $53 billion spent in Iraq since 2003, there have to be some opportunities here for entrepreneurs.  Of course, one has to be a risk taker.
  • Are you tired of hearing pundits on financial issues telling you that “This time it’s different”?  I have discovered the antidote.  Refer them to an April 2008 study done by Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University.  Both also work with the National Bureau of Economic Research.  Their paper, titled “This Time is Different: A Panoramic View of Eight Centuries of Financial Crises” makes a convincing argument that nothing we are seeing in this recession is anything out of the ordinary.  You can skim the 59 pages, but the paper covers crises going back eight centuries  in 66 countries – not the usual short-term analysis.  Reinhart and Rogoff have gathered data from England’s defaults in the Middle Ages to Spain’s 13 defaults after 1500, to the latest headline crises.  The prose gets a big thick, but great fun if you are into economic and financial history on a global scale.
  • Adam Smith never thought that his theory of comparative advantage would lead to this.  According to Hong Kong multimillionaire Leung Moon-Lam, who has plans to build a biblical theme park in China, China is now the world’s biggest printer of Bibles.  One expects that most are exported.

Beer, But Do They Polka?

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Hoist One For Malaysia

Hoist One For Malaysia

I’m fascinated with difficult marketing problems and how companies have solved them.  So I had to read the November 24 New York Times article “Brewers Tread Carefully To Raise Sales In Malaysia.”  I love beer and worked three years in Singapore, so I have experience with finding a brew in the country next door.

Malaysia has 28 million people, but at least 60% of them are Muslim and thus forbidden from drinking beer or other alcoholic beverages, by law as well as religion.  Surely, this is a daunting assignment for a beer salesman.  The reporter interviewed Charles Ireland (appropriate name), managing director of Guinness Anchor in Malaysia.  Mr. Ireland described how at a recent concert to celebrate Guinness’ 250th birthday, headlining Blacked Eyed Peas to pack them in, he couldn’t display the Guinness name anywhere.  Ireland says he targets Malaysian Indians and Chinese in his marketing, but it doesn’t help that Malaysia has the second highest alcohol tax in the world (trailing Norway).

Soren Holm Jensen, managing director of Carlsberg Malaysia, says he avoids advertising that shows people drinking in a social setting, concentrating just on how great his beer is.  Advertising for beer is confined to print media and in movie theaters.

With alcoholic beverages legal for only 35-40% of the population, it is no surprise that Malaysia’s consumption is among the lowest per capita in S.E. Asia – about five liters/person annually.   Compare that to Thailand’s 31.6 liters/person.  I won’t go into all the penalties for Muslims caught drinking beer (a woman was sentenced to be caned last July), but beer is usually available to non-Muslims in restaurants, bars and even supermarkets.

A friend in Malaysia reports a couple facets of the beer trade that the Times didn’t pick up.  Seems that when the breweries pay their taxes, they are required to fill out the forms using a special ink – an ink that has only a sole source at an exorbitant price.  Who is getting the rake-off from that?

I said above that beer is usually available, but that no longer holds in Selangor state (around Kuala Lumpur) where the state government has forced 7-Eleven stores to stop selling brews.  This is said to be a move to prevent Muslims from buying beer – and to protect Muslim employees from having to handle the forbidden product (even if they don’t drink it).  Will restaurants soon be required to hire all non-Muslim staff if they wish to offer wine to their non-Muslim patrons?

Despite all this, Malaysian beer still tastes pretty good.