A report conducted for Control Risks by the Economist Intelligence Unit found that companies are struggling to keep pace with anti-corruption legislation. The research surveyed 316 in-house lawyers at companies around the globe.
It found that only 50 per cent of organisations have procedures in place for ‘due diligence’, to check the background and reputation of local and foreign business associates.
The survey found that just 50 per cent of global companies have policies banning ‘facilitation payments’ to suppliers and government agencies, and only a third have clauses in contracts with sub-contractors and consultants forbidding bribes being paid on the company’s behalf.
As a result, companies are being left vulnerable to employees paying bribes without their knowledge. The majority of respondents said small ‘operational bribes’ were the main cause of concerns, and almost half said it was possible, somewhat or very likely that they would need to investigate a suspected violation of anti-bribery laws in the next two years.
The report claims companies are risking their reputations through major gaps in their anti-corruption initiatives. Only one in four currently have whistleblowing lines where employees can report corruption fears in confidence and only half of respondents expected to increase their investment in anti-corruption in the coming years.
Richard Fenning, CEO of Control Risks, said: “Corruption is one of the most significant challenges for international business. Organisations today find themselves under ever-greater scrutiny, not only from regulators, but also from the media, their customers, clients and employees who are demanding that they be able to demonstrate that they operate ethically and with integrity.
“Yet, despite tougher anti-corruption legislation being enforced ever more rigorously, standards of governance remain at best inconsistent.
“This is a challenging world for business – good companies may wish to comply with their countries’ anti-corruption laws, but are disadvantaged by competitor companies not playing by the rules.
“But the impact of not having proportionate anti-corruption policies in a company can be severe – threatening their reputation and operations.”
The majority of the respondents said they would now be more likely to ‘self-report’ suspected bribery cases involving an employee to regulators, while just over a half said they would report any suspicions before conducting an investigation into a suspected bribery violation.