“EMEIA Fraud Survey 2017” by EY

Corruption, fraud and bribery: almost one-fifth of Swiss workers think they are becoming more widespread

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  • For the second time running, there is a greater perception of corruption in Switzerland: 18% of those asked think corrupt practices are widespread.
  • In Switzerland, paying in cash is a matter for discussion: 14% of those asked think it is a legitimate way of propping up your own business.
  • Major challenge: 25–34 year-olds are more corrupt than other age groups and assume that management is also corrupt.
  • People working in the financial industry are more open-minded about supervision and think regulation has a positive role to play in combating fraud.

ZURICH, 16 APRIL 2017 ‒ Switzerland’s hands are getting visibly dirtier: for the second time running, there is a greater perception of unethical conduct going on. Nearly one out of every five workers in Switzerland now thinks bribery and corruption are widespread in the country, according to a new survey of larger firms conducted by the advisory company EY. This figure, though, is still well below the 33% average for Western Europe. Across all 41 countries in Europe, Africa, the Middle East and India in which the survey was conducted, 51% of managers take it as read that corruption and bribery are widespread in their country. At the top of this inglorious league are Ukraine, Cyprus, Greece and Slovakia. Only Scandinavian countries perform better than Switzerland. Only 6% of respondents in Denmark think improper business practices are widespread there. That Germany’s figure – now 43% – has increased sharply gives cause for concern.

Moreover, over a third of Swiss respondents said they had evidence of unethical practices in their own company, compared with 45% in Western Europe as a whole. The most corruption, it appears, is to be found in Turkish and Indian firms, where over three-quarters of respondents said they had seen people behaving unethically.

Polished financial results suspected in 20% of companies
Every fifth person in Switzerland taking part in the survey assumes that Swiss companies often make their financial results look better than they actually are. Half the respondents in Austria took this view, and the figure in Germany was 42% – well above the overall average of 39%. Switzerland came off less well when it came to using cash as a means of bribery. This is seen as justified by 14% of respondents in Switzerland where the object is to help your own company come out of a downturn unscathed. That figure is 4% higher than in Western Europe as a whole.

“Despite the constantly growing awareness of corruption and bribery in Switzerland, the country hasn’t generally become more corrupt. The results can be explained by three factors in particular: the many public scandals have made people more aware of corruption; people quite simply notice unethical behavior more readily; the law is also better enforced, so that more time and effort are put into prosecuting and punishing white-collar crime. It should also be borne in mind that Switzerland is an exporting country that comes into frequent contact with corruption through subsidiaries, suppliers and customers,” says Michael Faske, Partner and Head of Anti- Fraud at EY Switzerland, summing up the most important findings about Switzerland.

Future leaders act unethically
Young professionals prefer collaborative working, do not get tied up in the details, value a work-life balance and evidently often display unethical behavior: among the 25–34 year-olds, a higher proportion of individuals compared with all other age groups are prepared to justify unethical behavior in order to save the company or to boost their own career. One in four of the young survey respondents justify offering bribes in order to win a new order or make progress with existing ones. No more than one in ten of the 45+ age group said they would act in such a way.

Besides greater willingness to offer bribes, the young generation is also less trusting of colleagues. They believe more strongly than any other age group that they would act unethically in order to climb up the career ladder more quickly or to earn more money. And more than two-thirds of young employees believe that their management would behave unethically if it meant saving the company.

Companies and trainers required
“The results are alarming. These young people are tomorrow’s leaders. If no steps are taken to put in place high ethical standards and address problematic behavior at all levels, unethical behavior will continue to increase in the future. Companies need programs to motivate all the employees to act ethically. Gaps between the generations must be identified and overcome. Training and targeted awareness raising are also important in order to encourage employees to report their concerns. However, universities and training companies are also encouraged to respond to these results,” explains Michael Faske.

Unethical behavior never pays off
The business practices at large international companies are being monitored more closely than ever. The public is increasingly demanding that companies be held accountable. The G20 states, the OECD and the World Bank are leading this development, with internationally networked regulatory authorities also contributing. Most respondents to the survey appear to be happy about this approach; 77% of them are in favor of managers specifically being held accountable for misconduct. The study also shows that 28% of respondents – 8% more than in 2015 – take the view that regulations have a positive impact on the ethical standards in their companies. This applies above all to emerging markets.

“Around the world, many countries are reverting to protectionism, growth in hopeful emerging countries remains below expectations, military conflicts are slowing down many companies and uncertainty is generally on the rise. Some managers are therefore evidently tempted to resort to unfair means. However, this is a very dangerous strategy and is by no means sustainable. Violations can result in financial consequences that threaten the existence of the company and damage its reputation in the long term. By contrast, the aim for a company that is modern and successful in the long term must be to build up trust and to make long-term investments in loyal employees and stable customer relations,” says Michael Faske following the survey results.

Financial industry takes more favorable view of regulation
The survey also reveals differences between sectors. For example, the 646 respondents in total from the financial industry are more firmly convinced than people in any other sector that what the regulators do has had a beneficial influence in promoting proper conduct; 41% of them agreed that that was the case. People working for banks and insurance companies are much more likely than average to be familiar with whistleblowing hotlines, with one-third of them saying their firm offered one, compared with one-fifth in all sectors overall. People working in the financial industry would also be much more likely to report well-founded suspicions to the regulatory authority than to the police. Generally speaking, the tendency is the other way round.

People working in the financial industry also take a less critical view of being monitored. Not only do they show more understanding for the need for staff to be supervised and for the use of research tools, but they are also less likely to feel that their privacy has been violated if the company monitors their own communications. Indeed, 19% of all respondents say firms need to monitor their employees’ emails in order to reduce the risk of corruption, bribery and fraud, compared to 28% in the financial industry. And while 58% of financial industry employees see this as a breach of privacy, 65% of respondents overall do so.

“There’s been a lot of new regulation since the global financial crisis, with financial institutions working hard to bring about a change of culture, and these are evidently having an effect. Although banks and insurers have more new rules to comply with than do other sectors, there is a recognition that this does help to promote ethically unobjectionable conduct. And there’s a more sympathetic attitude toward the monitoring of staff: bankers have certainly learned some lessons over the past ten years,” says Michael Faske.

About the study:
Between November 2016 and January 2017, we conducted a total of 4,100 interviews with employees in 41 countries in Western Europe (1,500, of whom 100 were in Switzerland), Eastern Europe (1,700), the Middle East (500), India (100) and Africa (300). A selection of the largest companies in each country was taken into consideration for the survey. The surveyed employees included top management, middle management and other employees. The interviews were held anonymously in the local language.


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