Senior executives see jump in anti-corruption enforcement. Global businesses must recognize both their risks and compliance obligations.

LONDON, KYIV, 14 MAY 2008 – Anti-corruption enforcement has become stronger around the globe over the past five years, according to nearly 70% of respondents to a new survey of business leaders worldwide. Their perceptions are supported by the fact that regulatory authorities and law enforcement are cooperating more frequently. At the same time corruption itself remains a significant problem for business, with more than one-third of survey respondents saying that corrupt business practices are becoming worse. In this environment executives and board members face daunting challenges around their compliance obligations.

Corruption or compliance – weighing the costs: the 10th global fraud survey, released today by leading professional services provider Ernst & Young, shows that although companies are recognizing the risks of corruption and are doing more to combat it, knowledge of relevant anti-corruption legislation remains patchy, undermining compliance efforts. With 37 countries implementing the OECD Anti-Bribery Convention, understanding the different legal obligations is a challenge.

Given US authorities’ more aggressive and extra-territorial enforcement of the Foreign Corrupt Practices Act (FCPA), all companies need to enhance their understanding of it. The FCPA has become the de facto international standard regarding bribery and corruption, yet only one-third of respondents claimed a good knowledge of it.

“Companies cannot afford to ignore the obligations associated with the FCPA and other anti-bribery laws. Compliance is certainly not just a matter for SEC registrants or US nationals,” explains David Stulb, Global Leader of Fraud Investigation & Dispute Services for Ernst & Young. “Companies and their boards that do not consider their corporate and individual vulnerability to FCPA enforcement are taking unnecessary risks.”

The survey shows that companies are increasingly waking up to the risks that corruption presents. More than half of respondents are increasing training on the subject and 45% conduct some form of anti-corruption due diligence before making corporate acquisitions.

“Many enforcement actions arise in the context of mergers and acquisitions. Companies need to consider more robust due diligence measures, particularly when target companies are active in higher-risk countries,” says Stulb. “Companies should consider the potential regulatory liabilities they are acquiring relative to bribery and corruption. It’s not just about avoiding penalties – it’s about improving the business.”

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About the survey

To create Corruption or compliance – weighing the costs: the 10th global fraud survey, researchers conducted 1186 telephone interviews with senior executives in large organizations, based in 33 countries. The interviews were conducted between November 2007 and February 2008 and the interviewees were senior financial and risk managers, as well as heads of legal, compliance and internal audit teams.

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