2.

Examination of the factors contributing to the ethical issues

1 In this part, we use the fraud diamond theory to examine the factors contributing to the
ethical issues. Wolfe and Hermanson first introduced the Fraud Diamond Theory in the CPA
Journal in December 2004. They concentrated their research on what motivates people to violate
trust in response to questions like "Why do people perpetrate fraud?" In their view, an offense
can only occur when all four conditions are met: pressure, opportunity, rationalization, and
capability.

2 So for the “opportunity”, the environmental factors are the main point. It is because the
MBI Founder Tedy Teow is the cousin of the Malaysia founding father Tunku Abdul Rahman.
Due to the environment that he growed up in, which is full of business and money. He showed
his business acumen from an early age, because when he was a student, he often brought pencils,
exercise books, combs and other various items to sell in school. Ordinary pencils can be sold
very cheaply, but relying on their packaging, these things can often be sold at high prices (The
Star 2022).

3 Entering the part of “motivation”. After Tedy Teow entered the society, he began to
realize that working for others just keeps getting a fixed salary, which does not make people rich.
And then he started to shift his goals to those invisible and intangible things, that is, the capital
disk and the fund-raising disk. He began to conduct in-depth research and packaged his
experience perfectly, making others think that he was an experienced investor. 4After the
experience of opening Island Red Cafe in 2008, he discovered that the franchise industry has
huge potential. He marketed his first company as having the best and trendiest coffee culture in
the country, anyone interested could invest in the company. But in reality it was just a chain of
coffee shops. A year later, many shareholders stopped getting their returns. And police reports
were lodged. Since then, he has discovered that this is a huge business opportunity. People tend
to pay their own fees based on what they see with their eyes and what is packaged on the surface.

5 Moving to the next part is “capability”. When he discovered that the capital disk had
huge potential to make money. He started planning using his ability to manipulate others like
what he does on the Island Red Cafe. Not long after came MBI. It took Penang by storm with
offers of “lucrative” returns and was big news in 2015. He was the director of MFace
International Berhad and MBI Marketing Sdn. Bhd., two companies under the MBI group. The
company set up M Mall O2O in Jalan Datuk Keramat as its headquarters. The mall had several
convenience stores which sold its own brand of body lotions, shampoo products and general
trading.

6 However, all of this is just only a case similar to the Ponzi Scheme. He has become
addicted to fraud, making huge amounts of money, but he forgets about his moral side and keeps
adding more victims. Tedy Teow just rationalizes his action and belief that violating rules is
acceptable. He lacks respect for others and keeps fraud.

3. Assessment on the impact of the ethical issues on the organization or individuals

involved
7 The impact of the ethical issues on organization is the reputation damage. Being
associated with money laundering severely damages the reputation of an organization. The MBI
Founder has big trust issues, and he could not launch anything about his business. It is because
he uses his customer or the public trust to fraud and to money laundering, and no one will
believe that a liar will bring any benefit to them. And also, the M Mall was raided by police,
while 91 bank accounts linked to MBI International were frozen. The accounts held RM177
Million.

8 Move to the impact on the individual. Individuals involved in corruption can be

prosecuted, jailed and fined. In our case study, the MBI founder Tedy Teow, was wanted by three
countries' governments, which is Malaysia, China, and Thailand, and eventually stood trial in
Malaysia and China. In 2020, Tedy Teow was charged by the police using the Section 420 Act,
Cheating and dishonestly inducing delivery for property. Once convicted, he may be sentenced to
a minimum of one year and a maximum of 10 years in prison, or whipping, or both. Even though
he never gets any punishment from the government or law except court fine. But his family has
not been spared, either. His son was held at knifepoint after three Chinese nationals broke into
the family’s house looking for him for a refund. The intruders fled but not before dropping two
fake bombs in the house. Also, in June 2018 the three directors of investment scheme operator
MFace International Bhd claimed trial at the Sessions Court on 11 charges of money laundering,
involving RM 122.88 million. The three directors were charged under subsection 4(1)b of the
Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act
(AMLA) 2001 (The Edge Malaysia 2018).

9 At the same time, for the impact on the national reputation of Malaysia,
corruption involving public officers and national leadership will taint the name and dignity of the
nation. Tedy Teow scammed the Chinese people, and this news was spread all around the world,
and let Malaysia get tagged with the nation full of liars. Also, for those who have been
defrauded, they will never get their hard-earned money back. In October 2019, more than 100
Chinese people knelt down collectively on the streets of Kuala Lumpur, Malaysia, weeping and
crying, begging the Malaysian government to “take the action” (Binance Square 2023). They all
were the victims of virtual currency fund MBI scam. When they knew that MBI was a fraud.
They went to the MBI headquarters, but then there was no one there already. They realized that
their money was gone. In this case, over 2 million people got it fraudulently and The amount
defrauded is as high as RM 329.57 Billion.