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Bribery and Corruption: Anti-corruption due diligence - EY - United States

Bribery and Corruption: Navigating the Global Risks

Anti-corruption due diligence

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To allow for secure growth into new markets, organizations cannot cut corners when it comes to anti-corruption due diligence.

Our 11th Fraud Survey found about 20% of companies conduct no fraud-related pre-acquisition due diligence procedures and 42% of companies conduct no fraud-related post-acquisition due diligence.

Will demand for growth overshadow corruption?

A weak global economy forces companies to pursue growth through a variety of business transactions in developed and emerging markets. Lucrative opportunities can put blinders on senior executives leading to a relaxation of policies regarding third-party due diligence. But could a company's desire to expand lead to overlooking drivers of fraud, bribery and corruption?

To allow for secure growth into new markets, organizations cannot cut corners when it comes to anti-corruption due diligence. The full attention of senior executives must be devoted to a proper corruption risk assessment, a comprehensive review of the target company's anti-corruption policies, developing action plans for any and all red flags that are identified, and strategy for combining best practices from each company into a strong anti-corruption compliance program.

Complex bribery and corruption challenges pose threat

Bribery and corruption pose significant challenges for companies entering into new markets through business transactions, including mergers, acquisitions or joint ventures. Companies must identify and understand the exposure that an acquisition may bring, and only through robust anti-corruption due diligence procedures can this be done effectively.

Guiding questions

As regulatory authorities continue to aggressively enforce anti-corruption laws, Global institutions must ask two key questions in order to safeguard their business operations from the potential crippling repercussions, in the form of legal costs and loss of business, under The Foreign Corrupt Practices Act of 1977 (FCPA):

  1. How much due diligence is sufficient to satisfy the requirements of the FCPA and other anti-corruption legislation?
  2. When should a company continue its due diligence and when should it walk away from the deal?

Substantial proportion of management targeting aggressive growth

1 in 5 aim to grow aggressively in next 12 months, and 1 in 3 will look out for opportunities, but 1 in 3 are waiting for prospects to improve.

Substantial proportion of management targeting aggressive growthSubstantial proportion of management targeting aggressive growth


Q: Which of the following best characterizes your company's strategy over the next year?

Base: All respondents (1,409)



For EY's 11th Fraud Survey, executives around the world were asked about their strategy in upcoming years in regard to growth opportunities. Twenty-three percent of respondents indicated that they will be growing aggressively, and 30% indicated that they would pursue growth opportunistically.

Entering lucrative emerging markets can be complicated and leave a global organization susceptible to bribery, corruption or fraud. A common growth strategy is to pursue joint ventures or mergers and acquisitions with companies that have a strong presence in the desired market.

But not enough attention is paid to the potential risks associated with these strategies. Companies must perform stringent third-party due diligence in order to uncover any "red flags" that could lead to substantial legal costs and a failed growth strategy.

Frequency of conducting due diligence into fraud risks

Frequency of conducting due diligence into fraud risks

Frequency of conducting due diligence into fraud risks


Q: How frequently has your company conducted due diligence into fraud and/or corruption-related risks before acquiring a new business in the last two years?

Q: How frequently has your company conducted fraud and/or corruption-related post-acquisition due diligence in the last two years?

Base: All making acquisitions (888)
The 'Don't know' percentages have been omitted in order to allow better comparison between the responses given.



Also, EY's 11th Fraud Survey found about 20 percent of companies conduct no fraud-related pre-acquisition due diligence procedures, and 42 percent of companies conduct no fraud-related post-acquisition due diligence.

Moreover, the survey revealed that nearly 30 percent of companies that acquired new business in the last two years "never or infrequently" considered bribery or corruption risks in the context of a potential acquisition.

Now more than ever, regulators expect companies to perform thorough pre- and post-acquisition anti-corruption due diligence, and this data signifies that there is considerable room for improvement.

Our perspective — phases of anti-corruption due diligence

  1. Corruption risk assessment for the target
  2. Anti-corruption due diligence procedures
  3. Enhanced procedures surrounding identified red flags
  4. Development of post-closing compliance program


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