Are you the person responsible for compliance with the UK’s Bribery Act 2010 in your office? If so, you might not want to read this. Just step away from your screen and whistle a happy tune, and that way you will never see the results of the annual fraud survey published by Ernst & Young earlier this week. There, isn’t that better?
If you are still reading, then it is grim news indeed. Of the 3,459 survey respondents, 48% admitted that they saw offering cash, entertainment or personal gifts and services to win or retain clients as justifiable, and/or that it was acceptable to misrepresent deliberately a company’s financial performance. Okay, you may say, but they must surely all be low-level cannon fodder of the sort that has always flirted with moral or legal sharp practice and always will? Sadly not – many employees at board and senior management level admitted that sales or costs numbers had been “manipulated” in their employer. Even if that is not in all cases strictly unlawful – the equivalent of the difference between tax avoidance and tax evasion, for example – you have to balance that against the likelihood that anyone asked to tell a major accounting firm about their own financial malpractice is likely to understate it, rather than not.
The survey makes particularly painful reading for multinational companies with actual or proposed operations in the emerging markets – nearly twice as many employees there saw bribery and corruption as normal than in the developed countries. In Kenya, for example, there were only a very few employees canvassed who did not see them as routine business strategies. Since the Bribery Act has extra-territorial reach, special care to put in place the “adequate procedures” (preventative measures) required by section 7 of the Act is obviously required where the risk of conduct offending the law is so high and so overt.
Then we get to the question not of complex webs of corruption but of good old self-serving dishonesty for personal gain. 54% of survey respondents in India thought that the financial performance of their subsidiary was exaggerated in reports to HQ, with Russia a little way ahead (behind ? – not sure that this is a good table to do well in) at 61% and Nigeria at 68%. The report puts a clear message to the parent companies of such operations – “These businesses have good reason to look critically at what is being reported back to the centre from other jurisdictions,” it warns.
And to conclude, the survey report fixes on the single most likely cause of all this: “Typical remuneration mechanisms are likely to encourage the unethical choice; employees rarely get a pay rise or promotion simply for complying with policy“. Overall, one in six employees surveyed believed that following their employer’s compliance policies to the letter would hamper competitiveness, so when you are compiling your suite of adequate anti-bribery procedures to comply with section 7, do be sure to give some visible thought to rewarding behaviours as well as results.