38% of global business execs say corruption prevalent

Increased enforcement activity and the introduction of new corporate criminal liability laws have failed to dent the scale of bribery and corruption globally, which has shown no improvement since 2012, according to research by EY

The firm says over $11bn of financial penalties have been imposed by regulators and law enforcement agencies around the world since 2012, yet 38% of global executives still believe bribery and corrupt practices remain prevalent in business.

EY’s global fraud survey polled 2,550 executives across 55 countries, including 50 executives from the UK.

While almost all (97%) of global respondents say they recognise the importance of their organisation being seen to operate with integrity, 13% say they would justify making cash payments to win or retain business, rising to 20% amongst the under 35 age-group.

In the UK, 34% of respondents stated that they believe bribery and corruption happens widely in business, an increase of 20 percentage points from the 2012 survey. This level is also higher than the average of 21% in Western Europe, with Germany, Switzerland and the Netherlands all recording significantly lower figures.

Respondents in the UK also reported higher instances of criminal wrongdoing, with 18% stating their company had experienced a significant fraud in the last two years – above the average for developed markets at 10%. 

Richard Indge, EY head of fraud investigation and dispute services, UK & Ireland, said: ‘Increasing regulation worldwide appears to be having little demonstrable impact on corruption. The prevalence of corruption, both globally and in the UK, means that businesses remain vulnerable to significant financial and reputational harm.’

EY’s research suggests the difference in levels of corruption between countries remains significant, with 20% of respondents in developed markets indicating bribery and corruption happens widely in business, compared with over half of those (52%) in emerging markets.

The findings show that 22% of respondents globally feel that individuals should take primary responsibility for their organisation behaving with integrity, while 41% said it was management’s primary responsibility. In the UK however, these figures are almost turned on their head, with 48% of respondents believing that responsibility lies with the individual, while only 26% believed it was management’s responsibility.

It also appears that there may be disillusionment with the ability of companies to crack down on wrongdoing. While the majority (78%) of respondents globally believe their organisations have the clear intent of penalising misconduct, only 57% are aware of people having actually been penalised. Third-party due diligence also seems to be a low priority, with only 59% of all respondents indicating they have a tailored risk-based approach to due diligence on third parties.

Andrew Gordon, EY global fraud investigation and dispute services leader, said: ‘The lack of improvement in global levels of corruption over the last six years shows that unethical behaviour in business remains a daunting challenge, despite intensified global enforcement.

‘The pressing challenge for management and the board, therefore, is to build a robust culture of integrity and compliance in which employees do the right thing because it’s the right thing to do and not just because a company code of conduct says they should.’

Report by Pat Sweet

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