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Bribery and corruption survey finds that firms still could do better

Chris Hamblin, Editor, London, 17 May 2016

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More than half (59%) of board members say that their anti-bribery and anti-corruption policies do not work effectively, according to a new international study from the English law firm of Eversheds.

Four-fifths of the senior executives involved in the research also confessed to uncovering corrupt business practices in their organisations, despite anti-bribery laws now being prevalent across the world and prosecutors gearing up their efforts.

The law firm's researchers spoke to 500 board-level executives in large organisations in 12 countries. The findings show that the people at the tops of companies realise that the issue is a serious one – for both profits and reputation – but are failing to back it up with adequate compliance initiatives to prevent, monitor and manage corrupt behaviour.

Almost all respondents (95%) said that bribery and corruption were important issues for their businesses but, fewer than a third of these board-level respondents (32%) said that they actually understood their anti-bribery policies and only 12% felt that they had received enough anti-bribery training. Just 45% believed their approach to managing bribery and corruption to be 'appropriate' for their businesss.

Despite a tiny and lacklustre group of prosecutions under the UK's Bribery Act and a rip-roaring sheaf of prosecutions under the US Foreign Corrupt Practices Act, fewer than one in ten (9%) board-level executives identified legal ramifications as the main reason why bribery and corruption were important issues to them, with a significant number instead saying that the effect on their business was the most important consideration. Specifically, when asked why bribery and corruption were significant issues, 61% of respondents identified the effect they were likely to have on commercial success, while 20% pointed to the potential for reputational damage. According to Eversheds, a further 10% "identified the strong ethical culture at their organisation," whatever that means.

The ethical intentions and commercial objectives of organisations appear to clash when it comes to bribery and corruption. 87% of senior executives said that their anti-bribery policies made it more difficult to drum up business, while almost one in five (19%) were worried that employees would resort to bribery or corruption when faced with challenging growth targets. 33% admitted that their businesses did not conduct "specific anti-bribery due diligence" when undertaking mergers and acquisitions.

Neill Blundell, a fraud and investigations partner at Eversheds LLP, said: “Until recently bribes were viewed by many as just the price of working in certain jurisdictions and sectors, but companies increasingly see bribery and corruption as being bad for business. However, 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 [sic] anti-bribery strategies. [There should be] less reliance on policies and greater focus on creating the right culture and environment in which sound business practices can flourish. Boards need to take action in three areas – a thorough risk assessment, which is regularly reviewed; training that promotes discussion and shapes behaviour, and ongoing monitoring. If businesses can identify questionable practices in their organisation early, it can make the difference between facing a prosecution or not.”

Of the 80% that identified bribery or corruption in their organisations, 51% took the decision to tell law enforcement agencies about it and 32% informed their regulators. However, there are substantive differences between jurisdictions. Almost three-quarters (72%) of those respondents in China said they had informed law enforcement agencies, while 43% did the same in the UK and just 26% did in Brazil. Less than a third (32%) of respondents could identify any jurisdiction that rewards companies for voluntary disclosure. Almost all (99%) stated that they would report wrongdoing to the police or regulators if they discovered bribery or corruption in their organisations tomorrow.

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