By Marcus Leach
Ernst & Young’s 2011 European fraud survey shows that one in seven employees polled at large UK companies are prepared to offer cash payments to secure business, and little more than half are aware of an anti-bribery policy at their firm.
Despite greater regulatory scrutiny, with the Bribery Act due to come fully into force on July 1st, there is a persistently high level of UK employees willing to behave unethically. In addition to the significant minority prepared to offer cash payments outlawed under the Act, around one in six would offer personal gifts or services to win business.
The survey of more than 2,300 employees, from the factory floor to the C-suite, across 25 European countries, including 104 UK respondents, found that the majority of UK companies remain unprepared for the new legislation, with compliance programmes significantly under performing.
Little more than half of UK respondents are aware of an anti-bribery policy at their company, while only 26 % of respondents have personally received anti-bribery training compared to just 17 % in France and 15% in Germany. This is particularly concerning considering that communication and training is one of the six principles of adequate anti-bribery procedures set out by the Ministry of Justice in their UK Bribery Act guidance.
The survey also found that UK respondents continue to report a challenging business and economic environment and feel under more pressure than ever to reduce costs (77% up from 72% in 2009). Overall, 50% of UK managers admitted that they a likely to cut corners to meet their targets — while this is a high figure, it is lower than the proportion in France (76%) and Germany (78%).
“Our survey findings should cause concern among company directors in the UK. A lack of understanding about fraud, bribery and corruption among all employees, combined with intense cost cutting initiatives at many companies, will no doubt create additional exposure to bribery and fraud risks,” John Smart, Fraud Investigation & Disputes Services leader for Ernst & Young in the UK & Ireland said.
Some comfort for the UK can however be found in the 72% of UK management who are not prepared, under any circumstances, to offer bribes to win business. This is far above the overall European average of 51%.
The Bribery Act
The Bribery Act increases demands on all companies with UK operations to re-evaluate their ethical guidelines and understand the risk of bribery. The introduction of the UK Bribery Act is timely given that 71% of UK respondents want to see increased supervision by regulators, compared with 86% in France and 58% in Germany. 72% in the UK think that offering rewards to incentivise employees coming forward with information, will encourage whistleblowing, more than the 54% in both France and Germany
Failure of compliance leadership from management
The survey found employees in the UK hold boards and senior management accountable for establishing and enforcing appropriate corporate behavior. Over three-quarters of those surveyed across Europe think that company boards should be held personally liable for fraud, bribery and corruption within their organisation.
"You don’t have an effective business strategy unless everyone from the CEO to the ‘shop-floor’ understands compliance. These results highlight a lack of improvement in the corporate response to fraud and corruption that is surprising given the tougher enforcement of anti-bribery legislation in the UK,” Smart added.
“The survey provides timely reminder for all UK companies. A declining focus on anti-fraud measures and a lack of understanding regarding the processes, structures and training around bribery dramatically increases the risks of bribery at a time when it has never been higher on the UK business agenda.
"Management teams are committed to anti-bribery — which is great — but while the head is willing, the flesh may be weak, as the training, guidance and understanding of bribery risks across companies just isn’t there. Reinvigorating the commitment by management and their boards to provide appropriate training, processes and structures should become an urgent priority, and will certainly be appreciated by all employees and stakeholders alike.”