Washington, February 19, 2016 – Control Risks, the global business risk consultancy, recently published its annual survey of business attitudes to corruption. The survey, which consisted of interviews with 824 companies worldwide, illustrates that despite increased global efforts to curtail it, corruption remains a significant obstacle to international businesses.
Some of the survey’s specific findings include:
- Corruption is still a major cost to international business: 20 percent of U.S. companies (compared to 30 percent globally) reported losing out on deals to corrupt competitors.
- Corruption risks continue to deter investors: 32 percent of U.S. companies (30 percent globally) say they have decided not to conduct business in specific countries because of the perceived risk of corruption.
- Corruption is killing deals: 35 percent of U.S. companies (30 percent globally) reported that the risk of corruption was the primary reason they pulled out of a deal on which they had already spent time and money.
- The picture is improving: Companies from countries with tight enforcement report fewer losses than before from corrupt competitors. In 2006, 44 percent of U.S. companies said they had lost out to corrupt competitors, compared with only 24 percent in 2015. And when asked whether international anti-corruption laws “improve the business environment for everyone,” 87 percent of U.S. respondents agreed (81 percent globally).
- There is still more to do: The survey shows that there are still wide variations in the maturity of company programs. In the worst case, conventional compliance approaches can actually increase risk because of the potential for complacency.
The survey findings suggest companies are not setting the right incentives to deter corruption. Establishing parity between financial targets and ethics is vital to ensuring compliance is embedded into a company’s culture. Yet on the survey’s list of eight deterrents to corruption, company performance criteria that emphasize integrity (along with financial targets) ranked as the sixth most used. Effective compliance programs support people making the right choices for the right reasons. This is not borne out by the survey.
“Something we’ve heard from our clients – even companies with strong compliance programs in the U.S. – is that they struggle to foster a culture of ethics and integrity consistently across their organizations. The survey findings are consistent with those anecdotes,” said Greg Esslinger, Senior Managing Director of Control Risks’ Compliance, Forensics and Intelligence practice in the Americas. “Many companies in the survey viewed compliance programs as a competitive advantage in challenging jurisdiction – but to really enjoy that advantage requires more than just a good program. It requires a corporate culture that drives and measures integrity and ethical behavior.”
Control Risks CEO Richard Fenning added, “Governments and companies across the world are increasingly aware of the importance of countering corruption, with China and Brazil in particular stepping up enforcement in the past year. Nevertheless, too many good businesses are losing out on opportunities to corrupt competitors, or choosing not to take a risk on an investment or entering a new market in the first place for fear of encountering corrupt practices. Companies need to find a balance and do more due diligence early on in any negotiation or market-entry planning, to spot the points of light in countries that may otherwise appear as no-go areas.”
To download the full report, click here.
