Almost half of UK firms believe offering entertainment to retain business is acceptable – survey

Will Green is news editor of Supply Management
3 July 2014

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3 July 2014 | Will Green

More than one in 10 firms globally have experienced a “significant fraud” in the past two years, according to a survey.

EY’s Global Fraud Survey also found 10 per cent of senior executives had been asked to pay a bribe in a business situation, while nearly 20 per cent of all respondents had been asked to make a charitable contribution by a customer or client.

Globally, almost 40 per cent of respondents believed bribery and corruption were widespread in their country, compared with 18 per cent in the UK.

However, when asked what activity was justified to help a business survive an economic downturn, 46 per cent of respondents in the UK said offering entertainment to win or retain business was acceptable, compared with 29 per cent worldwide. Globally, 14 per cent supported offering personal gifts, and 13 per cent said making cash payments.

Meanwhile, 6 per cent said misstating financial performance was justified to survive an economic downturn and 8 per cent were prepared to backdate contracts to meet a financial target.

The country where the most executives reported a fraud in the past two years was Egypt, where 44 per cent did so, compared with 16 per cent in the US, 8 per cent in China, 16 per cent in Russia, and 14 per cent in the UK.

The report said some executives “may be naïve regarding the scale and severity of the threat” posed by cybercrime, with almost half of respondents saying it was a “very low” or “fairly low” risk. However, in the UK 74 per cent said cybercrime posed a high risk.

John Smart, head of EY’s UK fraud investigation and dispute services, said the “rest of the world is playing catch-up with the UK in recognising cybercrime as a serious threat” but there was confusion over the Bribery Act.

“The fact that 46 per cent of UK businesses said it was OK to offer entertainment to retain business shows there is still confusion regarding what is and is not acceptable,” he said. “If gifts or entertainment are being offered as a quid pro quo or with a direct link to retaining business they are probably bribes.”

The survey involved 2,719 interviews across 59 countries.

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