The scale of bribery and corruption has shown no improvement globally since 2012, despite the unprecedented level of enforcement activity and introduction of new corporate criminal liability laws in that time. This is according to the 15th EY Global Fraud Survey, which surveyed 2,550 executives across 55 countries, including 50 executives from the UK.
This year’s survey found that despite over $11bn of financial penalties having been imposed by regulators and law enforcement agencies around the world since 2012, 38 per cent of global executives still believe bribery and corrupt practices remain prevalent in business.
In the UK, 34 per cent of respondents stated that they believe bribery and corruption happens widely in business, an increase of 20 percentage points from the 2012 survey. This level is also higher than the average of 21 per cent in Western Europe, with Germany, Switzerland and the Netherlands all recording significantly lower figures. Respondents in the UK also reported higher instances of criminal wrongdoing, with 18 per cent stating their company had experienced a significant fraud in the last two years – above the average for developed markets at 10 per cent.
Richard Indge, Head of Fraud Investigation & Dispute Services – UK & Ireland says:
“Increasing regulation worldwide appears to be having little demonstrable impact on corruption. The prevalence of corruption, both globally and in the UK, means that businesses remain vulnerable to significant financial and reputational harm.
“Management teams must identify and address the root causes of unethical conduct that impact their organisation, while compliance programs need to keep pace with the impact on business operations from rapid technological advancements and the increasingly complex risk environment. More robust risk management should be considered a strategic means of improving business performance.”
Varying levels of corruption across markets
The difference in levels of corruption between countries remains significant, with 20 per cent of respondents in developed markets indicating bribery and corruption happens widely in business, compared with over half of those (52 per cent) in emerging markets.
Regions where corruption risks were higher than the global average included Central and Eastern Europe (47 per cent), the Middle East (62 per cent) and Latin America (74 per cent), despite improved anti-corruption legislation and more active enforcement in some countries.
Overall, the findings show that there is often a lag between the introduction of stronger anti-bribery laws and reduced corruption, with Brazil, the Netherlands and the UK showing this trend. 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%, an improvement from 22% in 2014.