Corruption remains a major cost for honest companies


controlriskimgControl Risks has published its annual survey of business attitudes to corruption, comprising interviews with 824 companies worldwide.

The survey highlights that many ethically minded firms continue to be deterred from markets where corruption remains pervasive and are missing out on growth opportunities in the short term.

  • Corruption is still a major cost to international business. 14% of Australian companies that responded to the survey said they had lost contracts to corrupt competitors. The situation is worse in developing countries, particularly Indonesia, Colombia and Mexico, where 46%, 43% and 41%, respectively, reported lost opportunities due to corruption.
  • Corruption risks continue to deter investors. 25% of Australian respondents say they have decided not to conduct business in specific countries because of the perceived risk of corruption.
  • And corruption is killing deals. Another 25% of Australian respondents reported the risk of corruption was the primary reason they pulled out of a deal on which they had already spent time and money.
  • But the picture is improving. Companies from countries with tight enforcement report fewer losses than before from corrupt competitors. 81% of respondents agree that international anti-corruption laws “improve the business environment for everyone”.

At the same time in Australia, some companies believe there is little incentive to implement proper corruption risk and compliance measures, citing a perception of weakly enforced Australian foreign bribery laws and general apathy on the government’s part to address corruption.

“This is apparent from our survey, in which only 29% of Australian businesses focus on Australian legislation when considering their corruption compliance programmes,” says Jason Rance, Managing Director Australia Pacific, Control Risks.

“The good news for Australia is the high percentage of companies that implement anti-corruption compliance training for employees: 78% compared to the global average of 50%. However, the quality of training and continued vigilance in assessing and investigating corruption is vital.

“Often when organisations have comprehensive compliance processes in place, business leaders treat them as a safety net and don’t monitor or police thoroughly enough internally to detect breaches. There is a danger of a false sense of security in compliance departments.”

Another significant area of vulnerability surrounds compliance risks associated with third parties, as so many international corruption cases involve bribes paid by intermediaries.

Jason Rance said: “Australian companies still underestimate the corruption risks surrounding business partners. One in three companies believe the risk pertaining to third party intermediaries is low – yet only 56% of Australian respondents have due diligence procedures in place to assess third parties.”


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