Deloitte's survey found 19 per cent of organisations operating in high risk jurisdictions did not discuss corruption risk at management or board level. Image: Thinkstock.
Deloitte's survey found 19 per cent of organisations operating in high risk jurisdictions did not discuss corruption risk at management or board level. Image: Thinkstock.
A new survey looking at NZ and Australia business has found 34 per cent of respondents working for organisations with offshore operations reported a foreign bribery or corruption incident happening sometime over the past five years.
The 2015 Deloitte Bribery and Corruption Survey canvassed the views of 269public and private sector organisations across New Zealand and Australia and found 23 per cent of respondents reported experiencing one or more known instances of domestic corruption in the last five years. Of those, more than half occurred in the last twelve months, the survey found.
Deloitte lead forensics partner Barry Jordan said it was the second survey of its type conducted by Deloitte (the first was completed in 2012), but the first that asked about bribery and corruption from a domestic perspective.
"Almost one in four organisations reporting an incident is a significant level of corruption," Jordan said.
"There is no longer any excuse for complacency against this risk."
"Apart from the legal ramifications, which can include heavy fines or even jail time, the long term reputational damage from corruption can have serious long term flow on effects on an organisation's bottom line."
The most common types of domestic corruption cited by respondents included undisclosed conflicts of interest, supplier kickbacks and personal favours.
More than a quarter (26 per cent) of the reported incidents were from organisations with more than 5000 employees, the survey found. While 68 per cent of incidents involved only private/business individuals.
The survey showed no industry was immune from the taint of corruption, with all sectors experiencing at least some reported incidents in the last five years.
Domestic corruption was most often discovered through management reviews, internal controls and tip-offs from employees, the survey found.
However, in larger organisations with more than 5000 employees the top discovery method was from tip-offs via a dedicated hotline.
Jordan said the findings highlighted the importance large organisations should place on enabling tip-offs to be made, appropriately received and then actioned.
"Hotline channels have increasing potential in terms of incident detection and deterrence."
Looking at bribery and corruption for organisations with offshore operations, the survey found 34 per cent of respondents reported experiencing an offshore bribery and corruption incident in the last five years, up from 21 per cent in 2012.
There remains a concerning number of organisations that don't have formal compliance programmes or don't discuss corruption risk at their highest levels.
Such organisations faced the dual risk of operating in countries with higher corruption risk and being captured by extra-territorial bribery legislation, which is often more rigorously enforced than our own foreign bribery laws.
In addition to the extra-territorial reach of the laws of certain western countries, a number of countries, particularly China, India and Indonesia, had begun to prioritise and increase their corruption enforcement efforts, according to the report.
Disturbingly, the survey found that only 31 per cent of respondents with offshore operations reported having a comprehensive understanding of relevant legislation, up from 25 per cent in 2012.
Also, 40 per cent reported not having - or not knowing if they had - a formal compliance programme to manage corruption risk, down from 57 per cent in 2012.
The survey also found 19 per cent of organisations operating in high risk jurisdictions did not discuss corruption risk at management or board level, down from 21 per cent in 2012.
Corruption risk shouldn't be a barrier to growth and new markets, but it needed to be properly understood and managed, Jordan said.
"Organisations operating offshore need to fully understand the risks they face and be confident that their processes and controls are satisfactory to mitigate that risk.
"While there are encouraging signs pointing to an improvement in comprehensive understanding from the 2012 results, we still have a way to go."
