THE EFFECT OF ORGANIZATIONAL CULTURE, LEADERSHIP STYLE, WHISTLEBLOWING SYSTEMS, AND KNOW YOUR EMPLOYEE ON FRAUD PREVENTION IN SHARIA BANKING

DOI: 10.21532/apfjournal.v5i1.141 ABTRACT This study aims to get better knowledge on how to prevent fraud in sharia banking. The key factors in determining fraud prevention are organizational culture, leadership style, whistleblowing systems, and know your employee. This research involves 73 respondents in the scope of internal auditor. This research applies a survey using questionaire. The method used to process and analyze research data are descriptive analysis and multiple linear regression models. The results show that organizational culture has no significant effect on fraud prevention, but leadership style, whistleblowing systems, and know your employee have a positive significant effect on fraud prevention. Furthermore, organizational culture, leadership style, whistleblowing systems, and know your employee simultaneously have an effect on fraud prevention in sharia banking.


INTRODUCTION
In addition to being required to generate profits for survival and growth, banks must also apply the principle of prudence in their operations to prevent fraud. This is because bank losses due to fraud are quite significant. Losses due to fraud are not only in financial matter, but also in nonfinancial matter, such as the reputation and soundness of the bank. Based on the results of a survey conducted by ACFE from January 2016 to October 2017, financial losses due to fraud for companies around the world were an average of 5% of annual income. It was further stated that of the 2,690 cases of fraud that occurred during the study period, the highest occurred in the banking & financial services industry, reaching 366 cases (13.61%) (ACFE;RTTN 2018).
Sharia banks are banks that carry out their business activities based on Islamic principles sourced from the Al-Qur'an, Hadiths and the ijmak of ulemas applied both inside and outside the company (Maradita 2012). Then the question is: "Does the existence of Islamic principles in sharia banks guarantee that the sharia banks are free from fraud problems? It turns out that sharia banks cannot be separated from the problem of fraud. This is evident from the case of fictitious financing to 161 customers that occurred at the BJB Syariah Bank during 2014-2016. As a result of the fraud case, BJB suffered a loss of IDR 566.45 billion (detiknews, March 13, 2019). The next case was the case of fraud and embezzlement committed by 2 (two) employees working together with external parties to disburse fictitious Domestic Documented Credit. As a result of the case, BSM suffered a loss of IDR 75 billion (detiknews, February 3, 2015). Another case was the case of providing fictitious financing at Bank Jateng Syariah Semarang branch that cost the bank IDR 18 billion (Al Asy'Ari Adnan Hakim, 2016). In addition, there was a case of breaking into customer funds at BTPN Syariah Bandar Lampung Branch and Bank Muamalat NTB Branch committed by employees of the banks (www.tribun Lampung.co.id, October 18, 2017) and (journal asia.com, June 14, 2017).
Based on the facts above, it can be concluded that banks that have strict regulations and strong internal control systems are not always free from the risk of fraud, including sharia banks, although their operations are based on Islamic principles sourced from the Qur'an, Hadith and Ijmak of Ulemas. These conditions can cause the bank's reputation to decline, the level of soundness is disrupted, and the bank cannot generate enough profit to survive and grow. Therefore, there should be efforts or strategies taken by the banking industry to prevent fraud. Fraud prevention efforts can be efficient because the costs of detection, investigation and judicial processes can be minimized. "To be able to prevent fraud properly, it is necessary to understand the definition of fraud, perpetrators, and factors that can cause fraud, because an effective fraud prevention is a series of integrated actions that can reduce, minimize, and even eliminate the factors that cause fraud (BPKP) ; Pusdiklatwas 2008).
Factors that influence people to commit fraud can be seen in Fraud Diamond Theory introduced by Wolfe and Hermanson. According to the theory, the factors that influence people to commit fraud are incentive / pressure, opportunity, rationalization, and capability" (Wolfe & Hermanson 2004). Opportunity is the chance that allows individuals to commit fraud. Opportunity is usually caused by weaknesses in the internal control system, lack of supervision and abuse of authority. So, if the internal control system is effective, it will close one's opportunity to commit fraud. One component of the internal control system is the control environment. The control environment is reflected in the atmosphere and impression created by top management regarding the importance of internal control and expected standards of behavior. One sub-component of the control environment is integrity and ethical values adhered to by the organization, or better known as organizational culture.
Effective application of organizational culture can also prevent employees from committing fraud due to rationalization and capability. Rationalization is the consideration of someone who rationally encourages taking an action as a reflection of one's attitude or character. In many instances of fraud, perpetrators of fraud seek rationalization for their actions. Capability is a measure of the ability of an entity (organization, person, system) to achieve goals " (Norbarani 2012). In a company, employee capability is usually identified with competence. Competence has the main elements of knowledge and expertise as the basis needed by the organization to achieve organizational goals. With competence, however, an employee also has sufficient understanding and eventually exploits the weaknesses of the internal control system to commit fraud. According to Sulistyowati (2007), a good organizational culture will not open the slightest opportunity for employees to commit fraud because a good organizational culture will shape employees to have a sense of belonging and pride as employees of the company. So, the stronger the organizational culture of a company, the less fraud that employees might commit.
In addition, opportunities can also be reduced or minimized by the existence of whistleblowing systems and Know Your Employee. Effective whistleblowing systems will encourage the participation of employees in a company to be more willing to act to prevent fraud by reporting it to those who can handle it. Bank Indonesia through SE BI No.13 / 28 / DPNP dated December 9, 2011, states that the mechanism for reporting violations or called the whistleblowing system is one form of early detection of fraud which is one form of the development of GCG implementation regulated in PBI Number 8/14 / PBI / 2006. An effective whistleblowing system will make all employees in the company feel monitored when violations occur, so effective whistleblowing systems can close opportunities for employees to commit fraud.
In the banking industry, Know Your Employee (KYE) is one of the preventive efforts in an anti-fraud strategy consisting of the recognition and monitoring of employee profiles, such as character, behavior and lifestyle" (BI 2011). Recognition and monitoring of employee profiles are used to monitor the signs/ indications of unfair employee behavior and lifestyle (Red flag) needed to prevent negative things that have the potential for fraud. If all employees understand that all changes in the employee profile will always be monitored, the employees will always maintain their integrity, thus closing opportunities to commit fraud.
Incentive/pressure is the pressure that drives a person to commit fraud, both internal and external pressures. Internal pressure is the pressure that comes from within a person because of dissatisfaction regarding reward in the form of salary or other compensation received. Wexley & Yuki (2003), said "dissatisfaction due to inadequate compensation or tedious work can also support incidents of theft by workers". From this theory it can be concluded that employees who experience compensation dissatisfaction tend to look for other income, in this case looking for other income by committing fraud. Where as Pramudita (2013), mentioned "external pressure can come from the workplace environment, such as superior authority or leadership style. Employees tend to follow company rules when they are led with the right leadership style. The right leadership style is a leadership style that can provide work motivation to subordinates. Motivation can be in the form of rewards, praise, promotions, and clear assignments" (Nurjanah 2008).
In connection with the description above, the author is interested in examining the effect of organizational culture, leadership style, whistleblowing systems, and Know Your Employee (KYE) on fraud prevention in a sharia bank. Based on the background described above, the problem that will be examined in this study is whether the organizational culture, leadership style, whistleblowing, and know your employee have an influence on the prevention of fraud in a sharia bank, both partially and simultaneously.

LITERATURE REVIEW AND HYPO-THESIS Fraud
Fraud, based on its definition in the banking industry according to Bank Indonesia (SE BI No. 13/28 / DPNP 2011 concerning the Implementation of Anti-Fraud Strategies for Commercial Banks), is the act of deviation or omission deliberately done to trick, cheat, or manipulate banks, customers, or other parties, which occur in banking environment and/or use bank facilities so as to cause banks, customers, or other parties to suffer losses and / or fraud perpetrators obtain financial benefits both directly and indirectly. The types of acts which are classified as fraud are cheating, embezzlement of assets, information leakage, banking crime, and other actions that can be likened to them.
There are many factors that cause someone to commit fraud. According to Fraud Diamond Theory developed by Wolf and Hermanson, fraud is caused by 4 factors: incentive/pressure, opportunity, rationalization, and Capability "(Wolf & Hermanson 2014).
According to the center of education and training for supervision of the Financial and Development Supervisory Agency (Pusdiklatwas BPKP, 2013), fraud prevention is integrated efforts that can reduce the occurrence of factors causing fraud, such as: 1) minimizing the opportunities to commit fraud; 2) reducing the pressure on the employee so that he feels comfortable working and does not think of committing fraud; 3) eliminating the reasons for justification or rationalization of fraud committed. Fraud prevention in the banking industry by Bank Indonesia (SE BI No. 13/28 / DPNP 2011 concerning the Implementation of Anti-Fraud Strategies for Commercial Banks) is regulated as follows: "Banks are required to have and implement an anti-fraud strategy that is tailored to the internal and external environment, the complexity of business activities, the potential, type, and risk of fraud, and supported by adequate resources. Anti-fraud strategy is the Bank's strategy in controlling fraud that is designed with reference to the process of the occurrence of fraud by taking into account the characteristics and scope of potential fraud that is comprehensively and integrally arranged and implemented in the form of a fraud control system. The implementation of an anti-fraud strategy is part of the implementation of risk management, particularly those related to internal control aspects. The implementation of an anti-fraud strategy in the form of a fraud control system is elaborated through 4 (four) pillars of an interrelated fraud control strategy: 1) Prevention, 2) Detection, 3) Investigation, Reporting, and Sanctions; 4) Monitoring, Evaluation, and Follow Up. In this regard, the effectiveness of the implementation of an anti-fraud strategy must be supported by strengthening aspects of risk management that focus on fraud control, namely: active supervision of management, organizational structure and accountability, control and monitoring."

Organizational Culture
According to Luthans in Lako (2004), organizational culture is the norms and values that direct the behavior of organizational members. Every member will behave in accordance with the prevailing culture in order to be accepted by his environment. The organizational culture functions as a differentiator between one organization and another, builds a sense of identity for members, facilitates the growth of commitment, and enhances social system stability as a social unifier towards organizational integrity. The characteristics of organizational culture are an individual initiative, tolerance for risky actions, direction, integration, management support, control, identity, reward systems, tolerance for conflict, and communication patterns carried out in an organization". (Robbins 2008)

Leadership Style
Leadership style is a pattern of behavior that is designed to unite organizational goals with individual goals to achieve a certain goal (Flippo, 1987). According to Robbins (2008), there are four types of leadership styles as follows: 1) Charismatic leadership style. This leadership style triggers followers by displaying heroic or extraordinary abilities when they observe certain behaviors of their leaders; 2) Transactional leadership style. This leadership style guides or motivates followers to achieve the goals set by clarifying the requirements and duties; 3) Transformational leadership style. This leadership style inspires followers to go beyond their personal interests and is able to have a profound and extraordinary impact on the personalities of their followers; 4) Visionary leadership style. This leadership style is able to create and articulate a realistic, credible, and interesting vision about the future of organizations that are growing and improving.

Whistleblowing System
According to Sawyer (2012), whistleblowing system is an activity that discloses crime information. Whistleblowing system is structured as one of the efforts to prevent violations and crimes occurring within the company. This system is provided in such away that employees or people outside the company can report crimes committed internally within the company, to prevent losses suffered by the company, and to save their business". Whereas according to Bank Indonesia (SE BI No. 13/28 / DPNP 2011 regarding the Implementation of Anti-Fraud Strategies for Commercial Banks): "Whistleblowing system is a fraud prevention that emphasizes the disclosure of complaints. The whistleblowing system policy must be formulated clearly, easily understood, and could be implemented effectively in order to provide encouragement and awareness to Bank employees and officials to report fraud that occurs. To increase the effectiveness of implementing the whistleblowing system policy, the policy at least includes: 1) Protection of Whistleblowers, ie banks must have a commitment to provide support and protection to each fraud reporter as well as to guarantee the confidentiality of the identity of the fraud reporter and the reports of fraud submitted; 2) Regulations related to fraud complaints, i.e. Banks need to draw up internal regulations related to fraud complaints with reference to the applicable provisions and legislation; 3) Reporting System and Follow-Up Mechanisms for Fraudulent Reports, i.e. banks need to develop an effective fraud reporting system that contains clear reporting processes, including: reporting procedures, facilities, and parties responsible for handling reporting, and the reporting systems must be supported by clarity of follow-up mechanism for reported fraud events; 4) The policy must be transparent and consistently applied so as to generate confidence in all bank employees in the reliability and confidentiality of the whistleblowing mechanism ".

Know Your Employee (KYE)
Bank Indonesia (SE BI No. 13/28 / DPNP 2011 concerning the Implementation of Anti-Fraud Strategies for Commercial Banks) states that Know your employee (KYE) is an effort to prevent fraud from the HR aspect. The KYE policy owned by the Bank must have: 1) an effective recruitment system and procedure. Through this system it is hoped that a complete and accurate description of prospective employee track records (pre employee screening) can be obtained; 2) the selection system which is equipped with appropriate qualifications by considering risks, and determined objectively and transparently. The system must reach out to promotions and transfers, including placement in positions that have a high risk of fraud; and 3) the policy of "Know your employee" includes, among others, the recognition and monitoring of employees' character, behavior and lifestyle.
Through the implementation of the know your employee (KYE) policy, a leader can find out and at the same time monitor the profile of the employees he leads, including the character, behavior and lifestyle of the employees. If in certain conditions there are known changes in the character, behavior and lifestyle of employees, then the condition can be called "fraud red flag", which is a sign or an unusual condition that is a sign of an act of fraud. According to Tuanakotta (2013), auditors and investigators use red flag as a sign or indication of financial statement fraud. Red flag can also be regarded as an odd condition or different from normal condition which is a clue or an indication of something unusual and requires further investigation.

CONCEPTUAL FRAMWORK AND HYPOTHESIS
Based on the background and theoretical basis, the framework of thought used in this study is as follow (Figure 1.) The hypotheses to be tested in this study are: H1: Organizational culture has a positive effect on fraud prevention in a sharia bank. H2: The right leadership style has a positive effect on fraud prevention in a sharia bank. H3: The effective whistleblowing system has a positive effect on fraud prevention in a sharia bank. H4: Know Your Employee has a positive effect on fraud prevention in a sharia bank.

METHODS
This study was conducted at a sharia bank in Jakarta from March 2019 to April 2019. The research method used was a descriptive method with a quantitative approach. The study was conducted through distributing questionnaires to all employees working in the Internal Audit work unit at a Sharia bank. The study population was all Internal Auditors from various positions / levels totaling 73 people. The sampling method used was saturated sampling method, where the entire population was used as samples. The type of data used was primary data. Primary data was obtained from questionnaires distributed to employees as the respondents.

Measurement of Variables and Operational Definition Dependent Variable (Y)
The dependent variable in this study is fraud prevention. Fraud prevention is a strategy to control fraud by suppressing the causes of fraud that is compiled comprehensively and integratedly. Fraud in this study is measured by using indicators of active supervision of management, organizational structure & accountability, control, and monitoring. The scale used in this study is the interval.

Independent Variable (X) a. Organizational Culture
Organizational culture is a pattern of behavior, or good or bad behavior, which can or cannot be accepted by the company environment, including regarding the attention of top management as a role model that is implemented by giving awards or sanctions to employee behavior that is appropriate or not in accordance with organizational culture. Organizational culture is measured using indicators: visible role models, internalization processes, and respect for ethical actors. The scale used is the interval.

b. Leadership Style
Leadership style refers to the appropriate style of a leader who can provide motivation to employees working under his leadership so that the employees will try, be willing, and enthusiastic about achieving organizational goals. Leadership style is measured by using indicators of recognition of the existence of employees, clear communication about company goals, delegation of authority and responsibilities, giving motivation of inspiration, and giving praise. The scale used is the interval.

c. Whistleblowing System (WBS)
Whistleblowing System (WBS) is a mechanism for submitting complaints of suspected fraud that has occurred or will occur. This mechanism involves employees and other people in the company and is structured as an effort to prevent fraud. It is the creation of conditions that make employees who witness or are aware of violations want to report. WBS is measured using the indicator of Protection

d. Know Your Employee (KYE)
KYE is a policy of recognizing employees through the recognition and monitoring of employee profiles that include character, behavior and lifestyle, as an early warning if there are signs/indications that are not fair (red flags) that have the potential for fraud. KYE is measured by using an indicator of selection system that is equipped with appropriate qualifications, considers risks, and is established objectively & transparently, a policy governing the introduction and monitoring of employee character, behavior and lifestyle, and the availability of a complete and up-to-date employee profile. The scale used is the interval.
The method used to process and analyze the data is multiple linear regression analysis technique. For the validity of the results of the analysis, the quality of research instruments will be tested, consisting of validity and reliability. The next is data normality test, classic assumption test, and research hypothesis test. Data processing is performed using the SPSS application.

RESULT AND DISCUSSION
Based on the results of the validity and reliability test to measure the quality of research instruments, the results obtained are as follows: 1. The "R count" value for each question in questionnaire from number 1 to 40 shows a greater value than "T Table" value (0.2303), meaning that the instrument is valid.

Cronbach's Alpha value based on
Standardized items shows the value of 0.958, meaning that the instrument is reliable overall (greater than 0.60).
In addition, Cronbach's Alpha value if Item Deleted shows that the value of each question no. 1 to 39 is greater than 0.70, so each question is reliable and acceptable. Whereas based on the results of the data normality test and classical assumption test, it can be said that the data is normally distributed. There is no multicollinearity, and heteroscedasticity symptoms do not occur. While the results of the regression test are as follows: Based on the

a. Organizational Culture
The results of hypothesis test indicate that organizational culture has a regression coefficient value of 0.045 with a significance level of 0.663, or more than 0.05. So it can be concluded that organizational culture has a positive influence on fraud prevention at a sharia bank, but it is not significant. This condition may be caused by the organizational culture which is part of one of the elements of internal control system, in which the control environment has less direct effect on reducing the occurrence of opportunities, direct the rationalization of employee thought not to deviate, and direct the thoughts of employees who have the competency not to commit fraud. So in this case an intermediate variable in the form of an internal control system is needed.

b. Leadership Style
The results of hypothesis test show that leadership style has a regression coefficient value of 0.182 with a significance level of 0.030, or less than 0.05. So, it can be concluded that the leadership style has a significant positive effect on fraud prevention in a sharia bank. This condition may be due to conformity in Islamic teachings that a human being, in this case, employees must obey Allah, the Prophet and the Leader. In this case the leadership style in sharia bank can reduce the pressure on employees to commit fraud by providing work motivation to employees and creating conducive working conditions.

c. Whistleblowing Systems (WBS)
The results of hypothesis test show that whistleblowing system has a regression coefficient value of 0.291 with a significance level of 0.002, or less than 0.05. So it can be concluded that whistleblowing system has a significant positive effect on fraud prevention in an sharia bank. This condition may be due to conformity in Islamic teachings which must always lead to goodness and prevent unkindness, either through power, oral or prayer (amar ma'ruh nahi munkar). Whistleblowing system is a means to do this.

d. Know Your Employee (KYE)
The results of hypothesis test show that KYE has a regression coefficient value of 0.280 with a significance level of 0.004, or less than 0.05. So it can be concluded that KYE has a significant positive effect on fraud prevention in a sharia bank. This condition may be due to conformity in the Islamic teaching that teaches every human being, in this case employees, to always do contemplation (muhasabah) to know oneself, in the event that the leader knows the employee he leads to be able to make further improvements.

CONCLUSION
Based on the tests conducted, it can be concluded that organizational culture, leadership style, whistleblowing system, and know your employee simultaneously have a positive effect on fraud prevention in a sharia bank. This means that good application of organizational culture, appropriate leadership style, effective whistleblowing system program, and good Know Your Employee program can make fraud prevention program in the sharia bank more effective. However, based on the results of this research, it is also known that there are still 37.6% that influence fraud prevention in the sharia bank outside the studied variables. This means that there are still other fraud prevention programs that must be carried out by the sharia bank so that fraud can be prevented. Of the 4 (four) research hypotheses examined in this study, only 3 (three) research hypotheses that have a significant positive effect on fraud prevention, such as leadership style, whistleblowing systems, and know your employee, while organizational culture has a positive influence on fraud prevention, but it is not significant.
The results of this study provide important implications for the management of the sharia bank to: Emphasize on the importance of leadership in preventing fraud. Good leadership can create comfortable and conducive employee working atmosphere, so as to reduce employee pressure to do actions that are detrimental to the company. Leadership can also motivate employees to work better to advance their company, so they will not think to do acts that harm the company, including fraud.
Increase the effectiveness of the whistleblowing systems program as a medium that makes it easy for employees to report any indication of fraud committed by colleagues, subordinates or leaders. Thus, it can create a condition where employees do the amar ma'ruf nahi munkar. The improvement of the whistleblowing program must also be balanced with a good employee reporting protection program and transparent systems and procedures for following up complaints.
Improve Know Your Employee Program that has been running, for example by utilizing technology, so that the provision of employee profile data and red flags are always up to date. The use of data-based technology will be able to provide real time red flag data, so that management can early anticipation to prevent losses caused by employee fraud.
Limitations in this study include: (1) this study uses a questionnaire as a research instrument where the data collected is only based on respondents' perceptions as answers, so it will cause problems when the answers given are not honest; (2) this study is only conducted on employees in internal audit work units that are not directly involved with operations and know of fraud prevention programs conducted by management, so the results may be different if the research is conducted on employees whose work units in branch offices are directly involved with operation and may not quite understand the fraud prevention program launched by management; (3) Variables and indicators used in this study are not variables and indicators that specifically highlight the special characteristics of sharia banks, so the results will be more useful and implementative if the variables and indicators used are special characteristics in sharia banks.