Majority of board-level executives have uncovered corrupt business practices, says survey

posted by Andrew Allen
in Risk
27 May 2016

A survey suggests that 80 per cent of board-level executives have identified bribery or corruption in their organisation, but only 9 per cent see potential prosecution as the main reason why bribery is important to their business.

The survey, by UK law firm Evershedshas found that despite anti-bribery laws now being prevalent across the world, more than 80 per cent of the 500 board level executives surveyed across 12 countries confessed to uncovering corrupt business practices in their organisation.

Even though there are now high-profile prosecutions under the UK Bribery Act and US Foreign Corrupt Practices Act, 61 per cent of respondents identified the potential impact on commercial success of bribery as a more important risk factor than legal action.

A fifth of respondents identified the potential reputational damage as a more important risk factor than prosecution.

While 95 per cent of respondents said bribery and corruption was an important issue for their business, less than a third (32 per cent) said that they actually understood their anti-bribery policy. Only 12 per cent felt they had undertaken enough anti-bribery training and just 45 per cent believed their approach to managing bribery and corruption was appropriate for their business; 59% said that their anti-bribery policy does not work.

A further 87 per cent of respondents said their anti-bribery policy made it more difficult to build their business, while 19 were worried employees would resort to bribery or corruption when faced with challenging growth targets.

Neill Blundell, partner and head of the fraud and investigations group at Eversheds LLP, said: “The fact that less than one in ten see potential prosecution as the most important risk of bribery and corruption has profound implications for government’s anti-bribery strategies.

“Governments have typically tried to fight bribery by deterring companies with high profile prosecutions under the UK Bribery Act and similar overseas laws, but they need to work with the private sector to articulate the business case for anti-bribery.”

He said businesses should lean towards less reliance on policies and greater focus on creating a culture and environment in which sound business practices can flourish, as well as carrying out thorough risk assessments, training and ongoing monitoring.

“If businesses can identify questionable practices in their organisation early, it can make the difference between facing a prosecution or not, so the incentive to get on the front foot is significant,” said Blundell.

Out of the 80 per cent of respondents that identified bribery or corruption in their organisation, 51 per cent reported it to law enforcement agencies and 32 per cent informed regulators.

However, while 72 per cent of respondents in China said they had informed law enforcement agencies, only 43 per cent in the UK and just 26 per cent in Brazil did the same.

Nearly a third (32 per cent) of respondents believed there was no benefit to be gained by self-reporting bribery. But Eversheds queried this belief, saying that incentives for self-reporting are becoming more common, though the pace of regulatory change can makes it difficult for multinational businesses to understand these incentives.

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