The ABC of bribery & corruption: Deloitte 2017 survey
Kiwi organisations appreciate the risks associated with bribery and corruption but their response is comparatively slow
- Most respondents say reputation is the biggest risk for organisations whether domestic (65%) or international (70%)
- 77% of respondents say getting organisational culture right is the best way to prevent domestic corruption
- Conflict of interest was the most common type of domestic corruption at 21%, up almost 10% from Deloitte’s 2015 survey, followed by inappropriate gifts and hospitality (13%)
- Only 55% of organisations expect to implement or upgrade their anti-bribery and corruption compliance framework within the next five years
The potential damage bribery and corruption can cause to an organisation transcends any immediate financial costs. It has a deep and potentially lasting impact on an organisation’s reputation, on its culture, regulatory standing and even long-term profitability.
This is the finding of the Deloitte Bribery and Corruption Survey 2017 launched today. The report confirms that while organisations in Australia and New Zealand appreciate the risks associated with bribery and corruption, their response is slow compared to others worldwide.
Deloitte New Zealand Forensic leader Barry Jordan says: “Organisations need to be proactive and vigilant if they have any realistic chance of combating bribery and corruption, otherwise they will simply fall behind. Although we are getting much better at identifying the symptoms of commercial and public sector bribery and corruption, whether that is through traditional or social media channels, we have still a lot to learn.
Deloitte’s Australian Forensic leader Chris Noble says: “Most respondents say reputation is the biggest risk for organisations, whether domestic (65%) or international (70%). And 77% of respondents believe the best way to prevent domestic corruption is to get the organisational culture right. They also selected ‘tone at the top’ (15%), followed by getting processes right (14%) as the three most important factors organisations in our region need to improve their skills and prevent bribery and corruption incidents.”
The improvements in awareness around bribery and corruption are being driven in part by increased requirements from Anti-Bribery and Corruption (ABC) regulation, as well, in some cases, by using advanced detection and training systems.
“Global uncertainty is also increasing this focus,” says Mr Noble. “Our cross Tasman regulators are actively enforcing agendas to minimise money laundering, terrorist financing, corporate misconduct and fraud. There is also greater international cooperation, collaboration and benchmarking between law enforcement agencies to facilitate cross-jurisdictional investigations.”
“This awareness is brought out in our 2017 survey by the fact that tip-offs are still the most common method of detection,” says Mr Jordan. “This supports our experience at Deloitte that an organisation’s staff members are the first and best line of defense in the fight against bribery and corruption. As Chris said, Boards and executives need to set the tone (14%), but what is very important is that middle management have to effectively execute ABC (anti-bribery and corruption) programs on the ground.”
Noble and Jordan both agreed that in such volatile and uncertain times, companies cannot afford to be overconfident when it comes to preventing, detecting and responding to foreign and domestic bribery and corruption.
“The message from law makers is clear – bribery and corruption is the focus, and cutting corners to save time is not an acceptable way of doing business. Businesses and the regulators in Australia and New Zealand recognise the risk and will simply not tolerate bribery and corruption,” concludes Mr Jordan.
“The reality is whether you choose to adapt to developing expectations, or deploy the bare minimum to remain compliant in a regulatory sense, will determine whether you stay one step ahead of the ABC edge.”
Forty five per cent of respondents expect to implement or upgrade their ABC framework in the next five years. The International Organisation for Standardisation (ISO) is releasing a global standard for the design and management of ABC programs, ISO 37001:2016.
Read the full Deloitte Bribery and Corruption Survey 2017 here.
Other facts from the 2017 survey include:
New Zealand has an international reputation to maintain:
- In 2016 Transparency International’s Corruption Perceptions Index, ranked New Zealand and Denmark jointly as being perceived to have the least corrupt public institutions in the world
- Despite this, New Zealand had its biggest ever bribery prosecution, ‘Borlase and Noone’, in 2016. This was the first prosecution where the judgement included specific guidance for organisations looking at what should and should not be offered (or accepted) by New Zealand public officials.
- New Zealand clarifying penalties for foreign corruption and setting circumstances in relation to the liability for companies
Australia is on the cusp of further change, with impending initiatives such as:
- Australia’s first Open Government National Action Plan, an ambitious agenda that includes the improvement of business transparency and accountability, open data and digital transformation, access to government information, public sector integrity and public participation engagement
- New false accounting legislation has been introduced
- The Australian Attorney-General’s proposed amendments to existing foreign bribery offences now include recklessness, and a new corporate offence of failing to prevent foreign bribery
- A Senate Committee into the adequacy of the Australian legislative, institutional and policy framework in addressing corruption
- The appointment of a federal national integrity commission
- The consideration of Deferred Prosecution Agreements as a tool to combat corporate crimes
- Proposed whistle-blower protection reforms for corporate, public and not-for-profit sectors, with an inquiry due to report June 2017
- Proposed changes to beneficial ownership legislation, where submissions are under consideration and reporting is expected later this year
About Deloitte Bribery and Corruption Survey 2017
This year a total of 145 Australia and New Zealand-based organisations took part in the third Deloitte survey (2012, 2015 and 2017). The majority of respondents consist of senior executives and board members. The organisations include ASX200 and NZX50 companies, subsidiaries of foreign companies, public sector organisations and other listed and private companies.