Reputational risk seen as the key downside to bribery or corruption - Deloitte inaugural Bribery and Corruption Survey
Bribery and corruption most likely to be discovered by chance
19 June 2019
Reputational risk is seen as the key downside to bribery or corruption, according to a new survey of Irish businesses from Deloitte, and almost half of respondents see culture, tone at the top or codes of conduct as key to preventing bribery and corruption.
The report, which is Deloitte’s inaugural survey in this area, explains the experiences of the survey respondents in relation to preventing, detecting and responding to domestic and foreign bribery and corruption. It also describes how respondents perceived bribery and corruption risks, and the types of incidents they disclosed.
Commenting on the issue of bribery and corruption, Deirdre Carwood, Forensic Partner at Deloitte Ireland said: “Incidents of bribery and corruption can damage a business’s reputation, culture, regulatory standing and often profitability. However, our survey shows that, overall, bribery and corruption is still not well understood in Ireland, despite it being a reality of doing business in both domestic and foreign markets. Embedding this area into risk programmes is now more important than ever.
“The Criminal Justice (Corruption Offences) Act 2018 has introduced a new corporate corruption offence whereby a corporate shall be found guilty of an offence if it is committed by an employee or third party. To defend itself against proceedings brought against it, a business will need to prove that it took all reasonable steps and exercised all due diligence to prevent the issue occurring.
“Our view at Deloitte is that being prepared for such a situation should be front of mind for Irish businesses now.”
The survey represents a helpful snapshot of management thinking and perceptions on bribery and corruption across Irish businesses today and the findings were as follows:
- 15% of businesses have experienced known instances of domestic bribery and corruption
- 23% of known incidents of corruption related to undisclosed conflicts of interest, followed by providing confidential information to a third party (17%)
- Almost half (49%) of respondents saw reputational risk as the key downside to a domestic bribery or corruption
- Respondents saw culture (56%), tone at the top (48%) and codes of conduct (33%) as the top three factors in preventing domestic bribery or corruption
Carwood said: “Based on international trends Ireland still has some way to travel with regards to our ability to continually detect bribery and corruption. Our survey surprisingly shows that bribery and corruption is only seen by 18% of businesses as a key risk area. That said, 49% of businesses recognise reputational damage as the key downside to a bribery or corruption related incident. There is an obvious disconnect here.
“People remain at the heart of preventing domestic corruption, with an overwhelming majority considering organisational culture, tone at the top and codes of conduct as key to preventing corruption incidents.”
Unexpectedly, bribery and corruption being uncovered by chance was the most common method of detection (25%), followed by admission by the perpetrator (20%) and tip-offs (15%).
Detecting incidents early is critical to ensuring that risk is managed and visibility is maintained, according to Carwood. “Detection via data analytics and internal controls processes is low (5%), suggesting that organisations are not using data effectively. This is key. Ongoing monitoring of risky third parties is also very important to identify potential issues before they happen,” she said.
- 13% of businesses have experienced known instances of foreign bribery or corruption
- 45% of incidents were uncovered by internal audit or internal controls
- 40% of corporates have limited or no working knowledge of local or international bribery and corruption legislation in their organisation
For respondents for whom foreign bribery was relevant, only 16% rate foreign corruption as a top five risk to their operations in the next five years. Encouragingly, 67% of all respondents expect to implement or upgrade their compliance framework within the next five years.
“Risk assessments are the cornerstone of an effective programme as they are the guide for proportionate and effective decision making,” Carwood concluded.
The majority of the 106 respondents were at senior management, ‘C-suite’, or board level, and operate across a broad range of sectors and organisational sizes. They comprised many different functions including finance, fraud prevention, internal audit, legal and procurement.
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About this survey
The survey conducted by Deloitte Ireland on Irish businesses from April 2019 to May 2019. CEOs, CFOs, CROs, other executives, board members, compliance, in-house counsel and others were asked to anonymously respond to a series of questions relating to their experiences and perception of bribery and corruption risk affecting their businesses.
The survey was completed by 106 respondents. These were from a cross-section of sectors representing large corporates, small and medium sized enterprises, public sector organisations and financial institutions.
Unless otherwise stated, all percentages refer to the results from survey responses.
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