Many international companies neglect to pay the necessary attention to corruption issues within their organizations, according to a report published Tuesday by Control Risks, a risk consultancy firm. Control Risks found that companies are both underfinancing corruption compliance teams and underestimating the risk corruption poses to their businesses.
U.S. authorities continue to be most vigilant fighters of international business corruption, but promising trends in smaller and emerging markets mean "companies need to be prepared to be called to account for the effectiveness of their anti-corruption programs." A “majority” of the 638 companies surveyed by the group were “ill-prepared to conduct anti-bribery investigations of employees; have no board-level responsibility for anti-corruption; are still not providing anti-bribery and anti-corruption training programs for those operating in high-risk functions such as sales, and just under half still have no whistleblowing line,” the report said.
Most companies said they were optimistic about the next two years: Two- thirds of representatives of companies surveyed said they don’t think they’ll have to investigate an incident over that time even though more than half of them had to do so in the last two years. Two-thirds of internal investigations were triggered by internal whistle blowers or internal audits.
The survey found 87.9 percent of companies now have policies in place that ban employees from taking bribes to get contracts and 37.9 percent are working to increase their efforts to fight corruption. Emerging markets like Brazil hold companies accountable where they previously weren't. Companies need to properly implement new measures to stay out of trouble in these markets.
“The findings point to a disconnect between what head offices believe about the adequacy and effectiveness of their anti-corruption program and what actually happens in the higher-risk markets – this is the ‘remote office’ problem,” the report read. “Sometimes this is genuine ignorance; sometimes it is a form of willful blindness. Neither is a credible explanation in the eyes of the regulators.”
Control Risks CEO Richard Fenning said that it’s a matter of implementing these policies, not just having them. “Many companies do now have the compliance processes in place, but this is only half the battle,” he said. “Companies are getting better at talking the talk. They need to walk the walk, and introduce the real changes in culture and process that will protect them. Without this, there is a real risk of companies sleep-walking into a major crisis.”
Nearly 40 percent of the companies surveyed said they would seek legal options if they were pushed out of a business opportunity by a corrupt competitor. A quarter of respondents in India, Mexico and China said that low-level, small payments to push forward transactions with government entities was “essential to keep their business going,” highlighting the systemic corruption culture deeply rooted in their markets. Transparency International gave India a 36/100 score in its annual corruption index for 2013. Mexico received a 34/100 and China a 40/100.