Globalization factors in rise of corruption in businesses: 2 think tanks

By CONG B. CORRALES
Associate Editor

JUST as what progressive groups have predicted decades ago,  the latest findings of two international economic think tanks point to globalization and the ever-increasing number of third party business relationships as the two main factors why the risks of bribery and corruption in businesses could soar even higher this year.

Kroll, a global leader in risk mitigation and response solutions, has released its 2016 Anti-Bribery and Corruption Report or the ABC Report. The study was also produced with the support of Ethisphere Institute.

One in four of the senior-level officers and compliance professionals surveyed by Kroll cited two primary factors as contributing to these increased risks: Global expansion and an ever-increasing number of third party business relationships.

The report shows that one in four of those surveyed expressed no confidence in the ability of their company’s current controls to detect third party violations of anti-corruption laws.

“This percentage – 25 percent – is an alarmingly high figure given the increasing number of third party relationships involved in business activities, as well as the large percentage of enforcement actions rooted in payments facilitated through third parties,” Violet Ho, senior managing director of Investigations and Disputes Practice of Kroll, said in an e-mailed statement yesterday.

The ABC Report also includes the following findings:

• Fifty-four percent of respondents felt their business was not appropriately prepared to comply with global bribery and corruption risks.
• Forty-seven percent felt they did not have enough resources to support their organization’s anti- corruption efforts.
• Only 19 percent felt highly confident in their controls to detect third party violations of anti- corruption laws.
• Twenty-nine percent of respondents indicated that they are more concerned with personal liability than in prior years.
• Forty-seven percent described their company’s leadership as highly engaged in anti-bribery and corruption efforts.
• Eighty-six percent identified the chief financial officer and 66 percent identified the chief compliance officer as the internal stakeholders primarily responsible for driving programme development.
• Forty-eight percent of respondents do not conduct third party audits, and only 34 percent say they are providing training to third parties.

“Companies are clearly better prepared to address risk pro-actively when senior leadership engages,” said Erica Salmon Byrne, executive vice president of Governance and Compliance at Ethisphere.

Byrne said over a quarter of survey respondents stated that they did not have anti-corruption measures in place for corporate transaction targets.

The survey respondents are also “more likely to believe their bribery and corruption risks will remain the same or decrease in the coming years and they display more confidence in their ability to handle risk.”

Based in New York, with more than 50 offices across some 30 countries, Kroll has helped clients make confident risk management decision about people, assets, operations, and security through a wide range of investigations, cyber security, due diligence and compliance, physical and operational security and data and information management services for more than 40 years.

For its part, the Ethisphere Institute is the leading think tank that has defined and advanced the standards of ethical business practices that fuel corporation character, marketplace trust, and business success.