Fraud and corruption the easy option for growth?

Transcription

1 Fraud and corruption the easy option for growth? Europe, Middle East, India and Africa Fraud Survey findings for

2 Survey approach and participant profile Between December 2014 and January 2015, our researchers conducted 3,800 interviews with employees in 38 countries, covering Europe, Middle East, India and Africa A sample of the largest companies 1 in each country was interviewed. Employees interviewed included board directors, senior management, other management and other employees. Interviews were conducted on an anonymous basis in the local language online or in person. Details of the full survey are shown below Number of employees globally % of respondents Role within organization % of respondents Above 5, ,500 4, ,000 1, Less than interviews were conducted in Board director 1 Senior management 8 Other management 25 Other employee 63 Other 4 Results are compared with findings for Western Europe 2, Rapid-growth 3 and All respondents Please note that due to rounding or the omission of percentages to allow better comparison some figures may not sum to 100% 1 Large companies are defined as those having more than 150/250/500/1,000/1,500 employees globally depending on the country, and/or that is quoted on a stock exchange/is a multi-national. 2 Western Europe results are based on 1,600 interviews across 16 countries Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Norway, Portugal, Spain,, Switzerland and UK. 3 Rapid-growth results are based on 1,100 interviews across 11 countries Czech Republic, Egypt, India, Nigeria, Poland, Russia, Saudi Arabia, South Africa, Turkey, UAE and Ukraine. Page 2

3 Executive summary

4 Senior management engagement Say that head office management understand the business environment that they face in their market Say that, in the last 2 years, senior management frequently communicate about the importance of maintaining high ethical standards when conducting business Say senior management has strongly communicated its commitment to their ABAC policies 48% 31% 57% Western Europe Rapid-growth All respondents Are confident that head office management obtains the right level of data to assess the reliability of their business unit s financial results 82% Are confident that head office management uses the data that they collect to assess the reliability of their business unit s financial results Say senior management in their company display high ethical standards in the way they conduct business 44% 79% Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 4

5 Volatility a driver of corruption?

6 Slower than expected economic growth Western Europe Rapid-growth All respondents Slower economic growth than expected in our country Political instability in some of the countries we trade in Uncertainty about our ability to trade due to economic sanctions/export controls Q. Are any of the following increasing the challenges for the growth or success of your business? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 6

7 Management under pressure % Agree Western Europe Rapidgrowth All respondents Managers are under pressure to create new revenue opportunities Managers are under pressure to expand into higher risk markets % Strongly disagree % Tend to disagree % Neither agree nor disagree % Tend to agree % Strongly agree Q. To what extent do you agree or disagree with each of the following statements? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 7

8 Manipulation of financial performance Companies in this country often report their financial performance as better than it is 9 Western Europe 33 Rapid-growth 42 All respondents 37 Q. Can you indicate whether you think it applies, or does not apply, to your country/industry or whether you don t know? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 8

9 Sharing negative financial performance % Agree Western Europe Rapid-growth All Respondents % Strongly disagree % Tend to disagree % Neither agree nor disagree % Tend to agree % Strongly agree Q. Negative financial performance compared to our financial plan is shared in an open and transparent way with management at head office Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 9

10 Financial misstatement justifiable? Negotiating retrospective rebates with suppliers 11 Western Europe Rapid-growth All respondents Booking revenue from rebates with suppliers early Requesting suppliers delay invoicing Deliberately misstating financial performance At least one of the above Don t know Q. Which, if any, of the following do you feel can be justified if they help a business survive? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 10

11 Financial misstatement in the last twelve months Negotiating retrospective rebates, bonuses or discounts from suppliers 6 Western Europe Rapid-growth All respondents Revenues being recorded before they should be to meet short-term financial targets Under-reporting of costs incurred to meet short-term financial budgets Customers being required to buy unnecessary stock to meet short-term sales targets At least one of the above Don't know Q. Which, if any, of the following have you heard of happening at your company in the last 12 months? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 11

12 Bribery and corruption widespread Bribery/corrupt practices happen widely in business in this country 10 Western Europe 35 Rapid-growth 61 All respondents 51 Q. Can you indicate whether you think it applies, or does not apply, to your country/industry or whether you don t know? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 12

13 Bribery justifiable? Western Europe Rapid-growth All respondents Offering personal gifts Offering cash payments Offering entertainment At least one of the above Q. Which, if any, of the following do you feel can be justified if they help a business survive? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 13

14 Does compliance enable growth?

15 Revenues increased or decreased? % Increased Western Europe Rapid-growth All respondents Decreased a lot Decreased a little Stayed the same Increased a little Increased a lot Q. Would you say that the revenue of your company has increased, decreased, or stayed the same over the last 2 years? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 15

16 Compliance and ethics Rate their company s ethical standards when doing business as very good Are confident that their business operations in different countries meet the same ethical standards Disagree that unethical practices often go unnoticed by head office 35% 54% 48% Western Europe Rapid-growth All respondents Say ethical standards have got better in their company in the last two years Say that the level of regulatory activity in the last two years had a positive impact on their company s results 27% 12% Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 16

17 Protecting sustainable business value

18 Regulation Western Europe Rapid-growth All respondents Say the level of regulation in their sector has increased in the last two years 26% Say regulatory activity in their sector had a positive impact on ethical standards in their company 19% Say increased regulation in their sector is increasing the challenges for the growth or success of their business 20% Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 18

19 Basic building blocks - some way to go Western Europe Rapid-growth All respondents We have an anti-bribery/anticorruption policy and code of conduct Senior management has strongly communicated its commitment to our anti-bribery/anti-corruption policies There are clear penalties for breaking our anti-bribery/anticorruption policies The company has taken action against employees for breaching our anti-bribery/anti-corruption policies Q. For each of the following, please indicate whether it applies, or does not apply, to your organisation, or whether you don t know? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 19

20 Policies harming business? Western Europe % Agree Rapid-growth All respondents % Strongly disagree % Tend to disagree % Neither agree nor disagree % Tend to agree % Strongly agree Q. If we followed our anti-bribery and anti-corruption policy very closely, it would harm our competitiveness in this market Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 20

21 Are management engaged enough? At least once every six months At least once every year, but not more than once every six months Less often than once a year Western Europe Rapid-growth All respondents Never Don t know Q. As far as you are aware, how often, if at all, do members of the management team of your head office visit local offices or factories? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) Page 21

22 Management following up on whistle-blower reports Western Europe Rapid-growth All Respondents % Company does not have a hotline % Never % Sometimes % Always Q. Do you think that a report to your company s whistle-blowing hotline would be followed up on by senior management? Base: (100); Western Europe (1,600); Developed (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 22

23 Anti-bribery/anti-corruption training % Useful Western Europe Rapid-growth All Respondents % Not attended any training % Not at all useful % Not very useful % Fairly useful % Very useful Q. Thinking about anti-bribery/anti-corruption training you may have attended, how useful do you feel this training was in helping you to make appropriate decisions in the role you perform for your company? Base: (100); Western Europe (1,600); Developed (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 23

24 Third-party risk management Western Europe Rapid-growth All respondents Approved supplier database Background checking system Audit rights / regular audits of the third-party Use software/technology based check of third-party Check on ownership of the third-party Use external providers to run checks Q. Thinking about third parties that are used by your part of the business, what systems or processes do you have in place to manage and monitor those relationships? Base: (100); Western Europe (1,600); Rapid-growth (1,100); All respondents (3,800) % Don t know is not displayed Page 24

25 Appendix

26 Number of interviews: role, number of employees, sector Role within organization Board director - Senior management 4 Other management 19 Other employee 75 Other 2 Number of employees globally Above 5, ,500 4, ,000 1, Less than Industry sector Consumer products/retail/wholesale 4 Extractive industries 3 Financial Services 7 Government and public sector 10 Healthcare and life sciences 2 Manufacturing/chemicals 10 Power and utilities 1 Professional firms and services 5 Real estate 5 Technology, communications and entertainment 23 Transportation 12 Other sectors 18 Base: All respondents in (100) Page 26