Weighing the costs of corruption or compliance

Corruption is a growing problem for businesses and executives. Increased legislation, enforcement and a perception that corruption is getting worse contrasts with a lack of knowledge about the very laws designed to combat it.

Our 10th global fraud survey interviewed nearly 1,200 executives across the world about their experiences of bribery and corruption. Their insights show that although companies are doing more to establish anti-corruption programs, their efforts are being undermined by a lack of knowledge about relevant legislation.

Two-thirds of respondents claimed to know nothing about the Foreign Corrupt Practices Act (FCPA), even though it has become the de facto international standard and the basis for aggressive extraterritorial enforcement by US regulatory authorities.

Nearly half of US FCPA prosecutions in 2007 arose because of mergers and acquisitions. A check-list approach to anti-corruption due diligence, and reliance on representations and warranties, is unlikely to be sufficient protection from legal risk and possible reputational damage.

Other key findings include:

• 70% of respondents said enforcement has become stronger in their locality in the past five years. Individuals are increasingly targeted for prosecution.
• Over two-thirds of respondents believed their internal audit teams were capable of detecting bribery and corruption. More than half of respondents said increased training and awareness reduced risks.
• When standard processes were probed, basic compliance was found to be lacking in many cases.

Download "Corruption or compliance – weighing the costs: the 10th global fraud survey" (pdf, 1.5mb) for analysis of these issues and more, and what we consider the key elements of an effective anti-corruption compliance program.

Related reading

• 9th global fraud survey: fraud risk in emerging markets (pdf, 762kb)
• A survey into fraud risk mitigation in 13 European countries (pdf, 1.1mb)
• Global internal audit survey 2007 (pdf, 1mb)
• Transparency International’s Corruption Perception Index 2007 (pdf, 295kb)
• Transparency International’s Bribe Payers Index 2006 (pdf, 614kb)