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“Survey Says”: Surprises in Anti-Corruption Attitudes

surveyThe growth of the compliance industry has included an increase in business surveys and specific attitudes towards corruption and compliance programs.  They are interesting to read, not as the definitive source of business compliance trends, but as one of several pieces in the compliance puzzle.

I try to follow most of the significant compliance surveys and look for interesting issues to highlight.  Every survey is consistent on one topic – corruption issues are a high priority on every company’s agenda.  That is a relief.  If a company did not identify corruption as a significant issue, you have to wonder who is in charge and who is sitting on the Board of that company?

A recent survey issued by Control Risks (available here) had a few interesting items – some of which raised my eyebrow(s) concerning compliance trends.

Nearly 60 percent of the companies responding cited “operational” bribes as a cause of concern and approximately 30 percent cited “class” bribes for contracts as a significant corruption concern.  As used in the survey, an “operational” bribe was meant to refer to those bribes used to pay for regulatory approvals or perhaps falling into the facilitation payments category.

What was more surprising was the fact that only half of those surveyed have due diligence procedures in place when selecting local business associates, despite the known risks.  In addition, only 64 percent of those responding companies have contractual provisions in place to prevent bribery by third parties.  As John McEnroe was fond of saying, “You have got to be kidding me!!!”

Given the estimates that at least 70 to 90 percent of all FCPA enforcement actions include third party bribery violations, it is incredible to think that only half of the companies have put in place a due diligence system for screening potential third parties for bribery risks.survey3

Among the findings were some other doozies: over one-third (35 percent) of companies surveyed do not have formal policy statements prohibiting bribery; almost half of the companies do not have a policy statement forbidding bribes; and almost half (47%) of those questioned do not have policies or statements banning facilitation payments.

Interestingly, respondents pointed to India as the greatest risk (74 percent) for small bribes or facilitation payments, with Brazil second at 58 percent.

Equally disturbing was the fact that 91 percent of respondents state they have no specific anti-corruption training for employees in high-risk countries, and almost three quarters (74 percent) of companies have no anti-corruption training programs.

When it comes to compliance programs and tone-at-the-top, the survey results revealed that only 54 percent of the responding companies had board members assigned to oversee and monitor the anti-corruption compliance program.

In addition, only one-third of the companies were planning to increase spending on compliance, suggesting that there was some complacency on the compliance front.

allinthefamily4Overall, the survey results suggest that companies have not responded to corruption risks with sufficient concern and allocation of appropriate resources.  Given the aggressive global enforcement environment, the evident risks, and the imperative need to respond to those risks, government enforcement agencies should be surprised by this survey given the recent FCPA Guidance and the consistent message from prosecutors on the importance of compliance.

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