Bribery and corruption alive and well

 

Ireland’s corporate culture towards fraud and corrupt practices is not improving, with a significant proportion of Irish employees prepared to make cash payments to help a business survive (17%), or to act unethically to improve their own career progression or remuneration package (22%). Employees are also not open to introducing policies that would help to detect fraud – such as email, telephone or social media monitoring – according to EY’s EMEIA Fraud Survey: Human Instinct, Machine Logic.

 

The biennial report, which was carried out across EMEIA among over 4,100 employees in 41 countries including Ireland, found that 47% of Irish respondents believe bribery and corrupt practices are widespread in Ireland – significantly higher than the Western European average of 33%. The research also shows that there has been a decline in the number of respondents hearing senior management communicate about the importance of maintaining high ethical standards – down from 34% to 28%.

 

In terms of the practices at play in the Irish business community, 22% of respondents said they would be prepared to act unethically to improve their career progression or remuneration package. Types of activity considered unethical included ignoring unethical conduct in a team or at a supplier, or providing false information to management or third parties.

 

Making cash payments continues to be seen as an option, with 17% of respondents saying they would make a cash payment to help a business survive. This is significantly higher than the Western European average of 10% and only lower than Spain. An increasing number of respondents (16%, up from 12% in 2015) said they would also recognise revenue earlier to meet a target.

 

Julie Fenton, Partner and Head of EY’s Fraud Investigation & Dispute Services, said: “Our research shows bribery and corrupt practices remain a significant risk in Irish business today. It also highlights why it’s so important that senior management are alert to the potential unethical decisions that may be made by employees when they are under pressure to meet targets, hide errors or advance their own careers. It is a business imperative that organisations put in place programmes and training to make their employees aware of the implications of their actions during such times of pressure, and that they understand the consequences of behaving unethically – both for the company and for them personally.”

The first step in addressing fraudulent practices is enhanced detection policies. While 86% of respondents identified one or more data sources that companies should monitor to reduce the risk of bribery and corruption, they also said that monitoring of certain sources was a violation of their privacy.

 

61% stated that monitoring their social media profiles would be a violation. This was followed by monitoring telephone calls (60%), emails (55%) and instant messenger (49%). Just 28% of respondents said that regulatory activity had a positive impact on ethical standards in their company, exposing a clear fault line within Irish business in which fraudulent practices can thrive.

 

In terms of employees reporting concerns themselves, 56% of Irish respondents who had concerns said that they considered resigning but remained at the company – significantly higher than the EMEIA average of 37%. When it comes to the reasons behind employees not reporting fraudulent practices, 42% ranked concern about future career progression as the number one factor. This was followed by fear for their personal safety (37%), loyalty to colleagues (34%) and loyalty to their company (24%).

 

There are a number of simple protocols companies can introduce to tackle this issue head on, and which should be implemented across all businesses. These measures will protect the companies against bribery and corruption, and thus mitigate the associated financial and reputational risks. Rules and regulation are only part of the solution.

 

Ms Fenton added: “It’s critical that the tone is set from the top, with senior managers leading by example. Training and awareness programmes also have a role to play, helping employees to understand the consequences of fraud and corruption, but to be effective these should include discussion of grey areas and ethical dilemmas. To that point, it is imperative that when employees have concerns, they are comfortable reporting these issues.

 

“Companies need to actively foster a culture whereby employees feel encouraged to come forward to report misconduct and that they will be protected if they do. Similarly, when it comes to detecting fraud, companies need to strike a careful balance with the moral and ethical issues associated with data analysis, while also gathering enough information to reduce to exposure to fraud, bribery and corruption risk.”