Sometimes the best way to beat the competition is to cheat.
Source: Forbes, May 23 2012
According to a survey by Ernst & Young released Wednesday, a growing number of chief financial officers are willing to accept bribes and pay for contracts to keep business.
India is the worst of them all, with nearly a third of Indian executives willing to accept bribes.
Even as government’s around the world try to regulate against fraud and build an open, transparent market, top executives continue to express a willingness to break the law. Or, at the very least, believe their competitors are behaving unethically in the market.
E&Y’s 2012 Global Fraud Survey showed that 15% of senior executives polled at multinational companies said that they were actually willing to make cash payments to win or retain business. It’s low. But it is up from 9% in 2010.
The reason? Market pressures. Not regulation.
For a growing number of executives, it was the pressure to meet revenue growth targets that was undermining their commitment to comply with policies and the law. The competitive landscape continues to be distorted by unethical conduct. More than one-third of the respondents believe corruption is widespread in their country and this is perceived to be significantly higher in emerging markets.
In Brazil, corruption and bribery at the corporate level is considered common place by a whopping 84% of survey participants; Indonesia: 72% and in Turkey: 52%.
Perception is often greater than reality. But the facts show that fraud is on the rise, according to E&Y’s 32 page report. Financial statement fraud remains an important risk across many jurisdictions. Around 15% of respondents in Far East Asia think that financial performance misstatement can even be justified.
CFOs are the one’s signing off on those statements. They are also among the most influential executives reporting to the board on fraud, bribery and corruption issues. The results from the nearly 400 CFOs surveyed, however, suggest that a concerning minority could be part of the problem.
Fifteen percent of the CFOs surveyed said they would be willing to make cash payments to win business and 4% said they would be willing to misstate financial performance. This group of executives is not large, but given their responsibility, they represent a huge risk to their businesses and their boards.
Businesses continue to face a challenging economic environment. Driven by market uncertainties and declining economic growth forecasts, many companies are struggling to maintain margins. With fewer remaining opportunities for cost-cutting, many businesses are now focused on expanding into foreign markets, where bribery and corruption is just how things get done. Multinationals that come from highly litigious societies find it tempting to skirt the law, with little ramifications.
The findings in what was E&Y’s largest ever fraud survey are a cause for concern. They suggest that bribery, corruption and fraud remain widespread and the market pressure is the main reason. At the same time, many countries are strengthening their enforcement regimes. The U.K. has the new Anti-Bribery Act, and India, the worst offender, is trying to pass a range of proposed anti-bribery/anti-corruption laws during an election year there.
More than 1,700 executives across 43 countries, including CFOs and heads of legal, compliance and internal audit, were surveyed for their views on fraud, bribery and corruption.
Source: Forbes, May 23 2012
According to a survey by Ernst & Young released Wednesday, a growing number of chief financial officers are willing to accept bribes and pay for contracts to keep business.
India is the worst of them all, with nearly a third of Indian executives willing to accept bribes.
Even as government’s around the world try to regulate against fraud and build an open, transparent market, top executives continue to express a willingness to break the law. Or, at the very least, believe their competitors are behaving unethically in the market.
E&Y’s 2012 Global Fraud Survey showed that 15% of senior executives polled at multinational companies said that they were actually willing to make cash payments to win or retain business. It’s low. But it is up from 9% in 2010.
The reason? Market pressures. Not regulation.
For a growing number of executives, it was the pressure to meet revenue growth targets that was undermining their commitment to comply with policies and the law. The competitive landscape continues to be distorted by unethical conduct. More than one-third of the respondents believe corruption is widespread in their country and this is perceived to be significantly higher in emerging markets.
In Brazil, corruption and bribery at the corporate level is considered common place by a whopping 84% of survey participants; Indonesia: 72% and in Turkey: 52%.
Perception is often greater than reality. But the facts show that fraud is on the rise, according to E&Y’s 32 page report. Financial statement fraud remains an important risk across many jurisdictions. Around 15% of respondents in Far East Asia think that financial performance misstatement can even be justified.
CFOs are the one’s signing off on those statements. They are also among the most influential executives reporting to the board on fraud, bribery and corruption issues. The results from the nearly 400 CFOs surveyed, however, suggest that a concerning minority could be part of the problem.
Fifteen percent of the CFOs surveyed said they would be willing to make cash payments to win business and 4% said they would be willing to misstate financial performance. This group of executives is not large, but given their responsibility, they represent a huge risk to their businesses and their boards.
Businesses continue to face a challenging economic environment. Driven by market uncertainties and declining economic growth forecasts, many companies are struggling to maintain margins. With fewer remaining opportunities for cost-cutting, many businesses are now focused on expanding into foreign markets, where bribery and corruption is just how things get done. Multinationals that come from highly litigious societies find it tempting to skirt the law, with little ramifications.
The findings in what was E&Y’s largest ever fraud survey are a cause for concern. They suggest that bribery, corruption and fraud remain widespread and the market pressure is the main reason. At the same time, many countries are strengthening their enforcement regimes. The U.K. has the new Anti-Bribery Act, and India, the worst offender, is trying to pass a range of proposed anti-bribery/anti-corruption laws during an election year there.
More than 1,700 executives across 43 countries, including CFOs and heads of legal, compliance and internal audit, were surveyed for their views on fraud, bribery and corruption.
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