Despite more than US$11 billion of financial penalties issued since 2012, 38 per cent of global executives still believe bribery and corrupt practices remain prevalent in business. This is according to EY's Global Fraud Survey, now in its 15th consecutive year.

The report was based on 2,550 interviews conducted in the local language with senior decision-makers (CFOs, CCOs, general counsel and heads of internal audit) in a sample of the largest companies in 55 countries.

It found that:

• the scale of bribery and corruption has shown no improvement globally since 2012;
• overall, 38 per cent of the executives said corruption occurs widely in business – but this figure varies from 20 per cent in developed countries to 52 per cent in emerging markets;
• this means that levels of bribery and corruption in emerging markets are more than double that of developed markets;
• 20 per cent of respondents under the age of 35 would justify cash payments to win or retain business;
• corruption risks in some regions is higher than the global average: Central and Eastern Europe (47 per cent), the Middle East (62 per cent) and Latin America (74 per cent).

Tackling corruption take time

The report also found that improved anti-corruption legislation and more active enforcement does not always have an immediate effect and there can be a time-lag in seeing reduced levels of corruption as a result of legislation and enforcement. Three countries that have shown this trend, according to the report, are Brazil, the UK and the Netherlands. The report states: “Brazil, for example, has seen the introduction of legislation and increased enforcement over the last four years. Yet, 96 per cent of Brazilian respondents indicate that corrupt practices occur widely in business – an increase from 80 per cent in 2014 when the new laws were introduced. In the US, however, where enforcement of the Foreign Corrupt Practices Act (FCPA) intensified in the mid-2000s, perceived levels of corruption fell this year to 18 per cent, an improvement from 22 per cent in 2014.”

Also highlighted is the importance of internal penalties for corruption within companies, as 78 per cent of respondents believe their organisations have the clear intent of penalising misconduct, but only 57 per cent are aware of people having actually been punished.

Daunting challenge

EY's Andrew Gordon 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. While corruption remains so prevalent, businesses remain vulnerable to significant financial and reputational harm. Management teams must identify and address the root causes of unethical conduct in their organization. Compliance programs need to keep pace with the impact of rapid technological advancements and the increasingly complex risk environment on business operations. More robust risk management should be considered a strategic means of improving business performance.”

Top 15: Executive perceptions of bribery/corruption practices by country

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CTMfile take: The EY Global Fraud Survey has some shocking results, suggesting that corruption and bribery in business continue despite increased regulation and enforcement. It emphasises the importance of internal organisational procedures for deterring corruption and fraud, as well as the necessity of monitoring third-party risks.