"EMEIA Fraud Survey 2017" by EY – Europe, the Middle East, India and Africa

Young employees are more corrupt and less trusting

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  • Bribery and corruption are still a huge problem: Half of the 4,100 people surveyed believe that these practices are widespread in their country.
  • Major challenge: 25–34 year-olds are more corrupt than other age groups and assume that management is also corrupt.
  • Whistleblowing is not effectively implemented: Employees often do not know where they can report a suspicious person to.
  • Efforts by regulatory authorities are hitting home: Three-quarters of the survey respondents support individual responsibility for managers.

ZURICH, 5 APRIL 2017 – Although progress is being made in the fight against bribery and corruption, an average of 51% of the employees surveyed from all 41 countries as part of the survey assume that business transactions in their country involve bribery and corruption. This value remains unchanged compared with the last survey conducted in 2015. At the top of the list are Ukraine and Greece, and once more the Scandinavian countries emerged with the best results. Improvements were observed in Eastern Europe, although 64% of those surveyed there stated that corruption is widespread. In Western Europe, this figure is almost half at 33%.

Many of the employees surveyed at all hierarchy levels are prepared to resort to unfair means for their own career and for the supposed well-being of the company. 21% said that they would act unethically to support their own professional progression and to receive a higher salary; this figure was 14% in Western Europe. 5% of all survey respondents can imagine providing incorrect information to the company management team in order to improve their career or pay; in Western Europe this figure was 4%. 10% of all survey respondents would intentionally present the financial figures inaccurately in order to achieve the set goals (6% in Western Europe). A total of 17% (10% in Western Europe) of the respondents would be happy to make cash payments in order to obtain orders.

Widespread mistrust among the workforce
If the company is at significant risk, many managers begin to show less restraint: 77% of managers would justify unethical behaviour in this case. One in five of the respondents would even falsify the operating result if it meant that the company could survive, and one in three would justify cash payments in order to win or retain business.

Michael Faske, Head of Fraud Investigation & Dispute Services at EY commented on the results: "The diesel dupe, the Libor scandal, illegal price fixing and intentionally falsely declared meat; compliance violations are constantly hitting the headlines. The results of our survey show that unethical behaviour and a high level of mistrust among colleagues are typical of today's workforce at large companies. This applies in particular to managers and the youngest generation. The requirements of the regulatory authorities have continued to grow and even the companies themselves have introduced strict compliance regulations. In the perception within and outside of the company, these rules do not change anything however, if they are evaded by individual employees or even by the management committee."

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 behaviour: Among the 25–34 year-olds, a higher proportion of individuals compared with all other age groups are prepared to justify unethical behaviour 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 continue with existing orders. Out of the 45+ age group, only one in ten would act in such a way.

Besides greater willingness to offer bribes, the young generation is also less trusting of colleagues. More than all the other age groups, they believe more strongly 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 behaviour at all levels, unethical behaviour will continue to increase in the future. Companies need programmes to motivate all the employees to act ethically. Gaps between the generations must be identified and overcome. Training and targeted sensitisation 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 Faske.

The existing prevention programmes at the companies do not appear to be as effective as intended: Between the hierarchy levels, there is a significant difference with the assessment of whether prevention programmes are effective. Almost half of the managers believe that the importance of ethical standards was often communicated over the last two years. Nevertheless, only 32% of employees are of this opinion.

Survey respondents support punishment for managers
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. Internationally networked regulatory authorities contribute towards this.

The majority of respondents appear to be satisfied with this procedure. Thus 77% are in favour of managers specifically being held accountable for misconduct. Our study also shows that 28% of respondents – 8% more than in 2015 – are of the opinion that regulations have a positive impact on the ethical standards in their companies. This applies above all to emerging markets.

Employees are concerned but do not report their concerns
The results continue to demonstrate that employees often do not know where they can report a suspicious person to or they hesitate making a report. More than half of the respondents stated that they were concerned about unethical behaviour in their company. Almost half of respondents had even contemplated leaving the company as a result.

Whistleblowing is not implemented effectively: Only 21% of all survey respondents know how to contact their company's hotline. On the other hand, 73% indicated that if necessary they would forward information to a third party such as a regulator or another authority, instead of first reporting potential violations internally, thereby sparing their company public criticism and a loss of trust.

Use of technology in the fight against bribery and corruption
"Companies must use new technologies in order to identify and fight internal and external threats of bribery and corruption. Threats from insiders are difficult to identify without collecting and analysing different data. Companies can pay attention to the behaviour patterns of employees with risk potential. This includes irregular working hours, attempted access to restricted work areas or the use of unauthorised external storage devices. Furthermore, digital technologies should also be used to identify and reduce bribery and corruption," continues Michael Faske.

Our study shows a conflict of goals between protection of privacy and security needs: 75% of survey respondents indicated that their company should monitor data sources such as e-mails and telephones. At the same time, 89% of survey respondents consider monitoring these data sources to be an invasion of privacy.

"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. In 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 study results.


About the study:

Between November 2016 and January 2017, we held a total of 4,100 interviews with employees in 41 countries in Western Europe (1,500), 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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