Deloitte

March 19, 2009 08:00 ET

Four Out of 10 Global Executives Reluctant to Disclose Significant Corruption Incident to Authorities

Is Canada doing enough?

TORONTO, ONTARIO--(Marketwire - March 19, 2009) - In a Deloitte survey of 329 executives from around the world, 41 percent of respondents indicated that senior management should investigate and deal with matters internally or wait to see if there are consequences rather than make a voluntary disclosure to authorities if a significant incident of corruption was uncovered at their organizations.

The study, titled Fortifying Anti-Corruption in Today's Corporation, also revealed that despite differing views about disclosure, the vast majority of those surveyed (93 percent) believe that an internal investigation should be conducted if a significant incident of corruption were uncovered, and 75 percent support zero tolerance anti-corruption policies with strong disciplinary measures, including firing those responsible for corrupt acts.

"The Canadian anti-corruption and bribery legislation is different than that of other jurisdictions such as the US, because Canada does not have an administrative process encompassed within the legislation for handling corruption and bribery violations in a manner other than the criminal environment. Canadian companies thus have little incentive to come forward and self-report if they have a problem," said Peter Dent, national leader of Deloitte's forensic and dispute services practice in Canada. "Canadian respondents indicate the threat of Canadian prosecution has not been as significant when compared to what respondents in other countries have faced historically. In fact, we have yet to see our first prosecution under the Canadian legislation" concluded Dent.

The study also revealed the increasing role of internal audit in anti-corruption compliance. When asked to select up to three sources that would likely lead to changes in the respondents' organizations, advice from internal auditors was identified by 57 percent of respondents as most likely to lead to changes in an anti-corruption program, while compliance and internal audits were selected by 80 percent of respondents as one of the best ways to measure a program's effectiveness. In addition, 47 percent of those surveyed said that integrating an anti-corruption program into their internal audit system would make detection and prevention of corruption easier, with an additional 33 percent indicating that it is already integrated.

Other findings from the study include:

- Geographic and industry risks are reportedly being addressed by many. While two-thirds of respondents (67 percent) report that their companies adequately address corruption risks in the geographic regions where they do business and 72 percent say their companies' risks are adequately addressed for their industries, 32 percent would prefer that their organizations spend more on anti-corruption programs. Key point: Corporations have made strides in anti-corruption, but more can be done to address corruption risk.

- Fitting in and gaining business are top motivators for bribery by executives. When asked about the top motivators for an executive to pay bribes in their industry, fitting in with local business cultures (33 percent) and gaining more business (40 percent) garnered the most responses. Key Point: It's human nature to be tempted to adjust ones moral compass to the situation.

- Anti-corruption programs aren't consistently used around the world. Some companies still lack anti-corruption programs, despite the inherent risks. Geographically, 18.2 percent of Middle Eastern and African, 15.8 percent of Eastern European, 9.1 percent of Asia-Pacific, 8 percent of emerging market and 7.7 percent of U.S. business leaders surveyed reported having no anti-corruption program in place. Key point: Multinational companies considering new cross-border partnerships or transactions should include anti-corruption program reviews as part of overall due diligence.

- Tone at the top should set anti-corruption policy. While senior management (39 percent), general counsel (24 percent) and compliance officers (21 percent) were the first groups identified from which executives would seek advice in handling a corruption incident, 61 percent of respondents said that the most effective role for the CEO is to send out a strong signal and remain personally involved in anti-corruption efforts. Key point: Executives expect committed leadership on this issue from the CEO.

About the Survey

Deloitte contracted the Economist Intelligence Unit to conduct a survey of general management, finance, strategy and business development professionals around the world regarding global corruption. The survey was conducted from June 25 to August 4, 2008 through an online questionnaire. The 329 survey respondents were drawn from the Economist Intelligence Unit's global executive survey panel.

Among the executives participating in the survey, 46 percent were board members or members of the C-suite and 50 percent were management level. Respondents were predominantly from the financial services (19 percent), IT/technology (11 percent) and manufacturing (9 percent) industries.

Global revenues for participants' organizations were (in U.S. Dollars): more than $10 billion (35 percent); $5 billion to $10 billion (14 percent); $1 billion to $5 billion (28 percent); and $500 million to $1 billion (23 percent).

Respondents were individually located in Asia-Pacific (30 percent), North America (28 percent), Western Europe (25 percent), Middle East and Africa (7 percent), Eastern Europe (6 percent) and Latin America (4 percent).

About Deloitte

Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services through more than 7,700 people in 57 offices. Deloitte operates in Quebec as Samson Belair/Deloitte & Touche s.e.n.c.r.l. Deloitte is the Canadian member firm of Deloitte Touche Tohmatsu. Deloitte refers to one or more of Deloitte Touche Tohmatsu, a Swiss Verein, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.ca/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu and its member firms.

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