Would you offer bribes to win new business?
02 Oct 2019 3:06 am by Mark Dunn
One-third of board directors would offer bribes to win new contracts, according to the EY Fraud Survey 2017. The survey shows that the risk of bribery and corruption varies widely between countries, which support the need for a risk-based due diligence and monitoring.
Survey reveals 'significant' corruption risk
The EY Fraud Survey is based on interviews carried out between November 2016 and January 2017 with 4,100 people from 41 countries and territories in Europe, India, the Middle East and North Africa. The interviewees work for large companies in sectors including financial services, public sector, healthcare and life sciences, extractive industries, and retail.
The report's authors found that a "significant proportion" of the employees they interviewed said they could justify unethical behaviour to improve a company's or their personal earnings. The survey also revealed that:
- 33 percent of board directors or senior managers said they could rationalise offering cash payments to win or retain business.
- 77 percent acknowledged helping a business survive could warrant unethical behaviour
- 52 percent reported having concerns or information about misconduct in their country
- 51 percent believed that corrupt practices happen widely in their country
The survey's authors expressed greater concern at the attitudes of 25-34 year olds towards bribery and corruption. While bribery and corruption was historically viewed as a necessary part of doing business, in the age of compliance programmes and anti-corruption training, the researchers expected that younger employees would adopt a more enlightened approach. Surprisingly, however, one-quarter of 25-34 year olds interviewed for the survey said they could justify offering cash payments to win or retain business, compared to 12 percent of all other employees. It seems the next generation of business leaders remains susceptible to bribery and corruption.
Corruption risks vary between countries
The survey shows that the level of risk of bribery and corruption varies considerably between countries. In the UK, 25 percent of interviewees said bribery or corrupt practices happen widely in business in their country. This figure was 28 percent for the France and the Netherlands. Denmark, Norway and Finland had the lowest perceived corruption risk with 6 percent, 10 percent and 16 percent respectively. By contrast, more than 75 percent of those interviewed in the Ukraine, Greece, India and Egypt said corruption is widespread in business. 42 percent of UK employees also said they thought their senior management would act unethically to ensure their business survived.
Need for risk-based due diligence
A risk-based approach to due diligence is increasingly recognised by regulators and businesses as the best way to manage third-party risk of bribery and corruption. Last year, the UK's Financial Conduct Authority called for banks to adopt a risk-based approach when considering doing business in a sector or region with a high risk of corruption. The FCA said banks should not withdraw from a high-risk region or sector altogether, but to manage each risk appropriately. Last year, the International Standards Organisation introduced the ISO 37001, a global standard that organisations and companies can use to certify their anti-bribery and corruption compliance procedures. It asks companies to carry out due diligence to a level that is "reasonable and proportionate" to the risk of corruption.
Studies like the EY Fraud Survey serve to highlight the importance of developing a culture of compliance that permeates a company from the board room to individual employees—and complementing it with an effective risk-based due diligence process. By focusing on high risk categories, such as countries or territories that score poorly on indexes like the Fraud Survey or Transparency International's Corruption Perception Index, companies are better positioned to mitigate bribery and corruption risk effectively.
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