UK companies failing to foster culture of ethical behaviour reveals EY Fraud Survey

5 April 2017

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  • 25% of UK respondents still perceive corruption to be widespread.
  • 42% of UK respondents believe their senior management would act unethically to help a business survive.
  • 37% of respondents aware of a whistleblowing hotline in their company, but 54% say they would not report due to concerns about career progression. 

A quarter of UK employees still believe that bribery and corruption happens widely in business in the UK, according to the findings of EY’s biennial Europe, Middle East, India and Africa Fraud Survey. The perception of UK respondents is that little progress has been made over the last 24 months, with few changes in the survey results from 2015. Nevertheless the findings compare favourably to some other countries, with 51% of all respondents across EMEIA reporting that bribery and corruption is widespread in their country.

The report, entitled “Human instinct or machine logic – which do you trust most in the fight against fraud and corruption?” showed only sporadic progress across EMEIA, based on a survey of 4,100 employees from large businesses in 41 countries, including 100 respondents from the UK.

According to the survey, some companies in the UK are struggling to foster a culture of ethical behaviour: only 24% of UK respondents have frequently heard their senior management communicate about the importance of maintaining ethical standards in business, and only 29% of UK respondents felt that action has been taken by their company against an employee for breaching ethical standards or regulation, compared to 43% in EMEIA. Forty-two percent of UK respondents believe that their senior management would act unethically to help a business survive, compared to 58% in EMEIA. Twelve per cent of UK respondents also said they believed their managers would offer a cash payment and that 16% would offer personal gifts to win or retain business. Encouragingly, seventy-five percent of UK respondents say they are also supportive of further initiatives to hold individuals to account for misconduct (77% EMEIA).

Jonathan Middup, Partner at EY Fraud Investigation & Dispute Services says: “Bribery and corruption is still perceived to be a prevalent issue in the UK, despite increased focus and scrutiny from the Government and regulators. The picture we are seeing from the survey and in our conversations with clients is that while many companies may think they have an effective compliance framework in place, in reality some are struggling to create a culture where it is in employees’ interests to do the right thing.  

“Rules and regulation are only part of the solution. It’s critical that the tone is set from the top, with senior managers leading by example. Training and awareness programmes also have a role to play, helping employees to understand the consequences of fraud and corruption, but to be effective these should include discussion of grey areas and ethical dilemmas.”

Failure to establish a culture of reporting unethical behaviour

While 37% of UK respondents are aware of whistleblowing hotlines, a striking number of respondents stated they would not report unethical behaviour due to concerns about future career progression within their company (54%) or fear for personal safety (33%).  When asked about changing attitudes towards whistleblowers over the last three years, 18% of UK respondents felt it has become easier for them to report their concerns internally and 11% felt whistleblowers are offered more protection. In contrast respondents in emerging markets such as India (27%) and Nigeria (24%) agree that they are now offered more protection to blow the whistle in comparison to three years ago.

Middup continues: “Many employees are unaware of the correct channels to report wrongdoing but perhaps more worryingly, it’s clear that some also feel under pressure to withhold information. Companies need to actively start fostering a culture whereby employees feel encouraged to come forward to report misconduct and that they will be protected if they do.”

Monitoring of employees’ data

UK respondents also showed discomfort with their company’s use of technology to monitor data sources to reduce fraud and corruption risk. Twenty one percent said their company should monitor emails, with 43% of UK respondents saying their company should undertake Criminal Record Bureau checks. Only 7% felt their company should monitor their instant messenger accounts, while 2% felt it should monitor their social media profiles, the lowest of all countries surveyed.

When asked if they support the routine collection and analysis of their data from email, telephone, security systems or the public record, respondents from Western (42%) and Eastern (49%) Europe were less supportive in comparison to India (87%) and Africa (80%).

Hywel Ball, EY’s UK Managing Partner of Assurance added: “Data ethics is becoming a growing topic of concern for both consumers and business and the law is struggling to keep up. With vast quantities of information now available about all of us at the touch of a button, who owns this data and how it is used isn’t clearly defined. Companies need to strike a careful balance with the moral and ethical issues associated with data analysis, while also gathering enough information in order to reduce their exposure to fraud, bribery and corruption risk.”

Bribery/corrupt practices perceived to happen widely in business in this country

Rank 2017

Country

% 2017

% 2015

L4L Rank*

Rank 2015

1

Ukraine

88

80

1

7

2

Cyprus

82

N/A

N/A

N/A

3

Greece

81

69

2

12

4

Slovakia

81

78

3

8

5

Croatia

79

92

4

1

6

Kenya

79

90

5

2

7

South Africa

79

78

6

9

8

Hungary

78

73

7

10

9

India

78

80

8

6

10

Egypt

75

64

9

15

11

Slovenia

74

87

10

3

12

Nigeria

73

72

11

11

13

Italy

71

67

12

14

14

Bulgaria

68

N/A

N/A

N/A

15

Turkey

67

63

13

16

16

Russia

66

60

14

18

17

Spain

64

69

15

13

18

Czech Republic

63

61

16

17

19

Portugal

60

82

17

5

20

Serbia

57

84

18

4

21

Jordan

53

N/A

N/A

N/A

22

Latvia

51

55

19

19

23

Ireland

47

50

20

20

24

Lithuania

47

45

21

21

25

Germany

43

26

22

30

26

Saudi Arabia

43

44

23

22

27

Poland

38

43

24

23

28

Belgium

36

34

25

27

29

Austria

32

42

26

24

30

Estonia

32

21

27

33

31

Romania

31

39

28

25

32

France

28

29

29

28

33

UAE

27

24

30

31

34

UK

25

27

31

29

35

Netherlands

23

13

32

34

36

Oman

19

36

33

26

37

Sweden

18

10

34

37

38

Switzerland

18

12

35

35

39

Finland

16

11

36

36

40

Norway

10

21

37

32

41

Denmark

6

4

38

38

Source: EY EMEIA Fraud Survey 2017 Human instinct or machine logic – which do you trust most in the fight against fraud and corruption?

Table shows percentage of respondents answering yes.

*Average of all respondents: 2017 51%, 2017 L4L, 2015 51% (L4L = Like for Like – countries that were surveyed in both 2015 and 2017).