Irish Business Leaders Don’t Believe Corruption Is Rife
21st April 2016
Less than one in 10 (8%) Irish business leaders believe that bribery and corrupt practices happen widely in business in Ireland, and none (0%) believe it is a common practice in their sector.
However two out of five (38%) senior decision makers in Irish companies would still be prepared to take potentially unethical actions to help their business survive an economic downturn, according to EY’s 14th Global Fraud Survey – Corporate misconduct: individual consequences – published today.
The biennial report, which was carried out among over 2,800 C-suite executives in 62 countries including Ireland, found that the number of Irish business leaders who believe bribery and corrupt practices are widespread has halved from 16% in 2014 to 8% in 2016. This compares to 28% of senior decision makers in British businesses who believed that bribery and corruption was very prevalent in the UK.
However, despite their belief that bribery does not exist in their sector, Irish executives said they would be prepared to engage in potentially unethical behaviour to win or retain business, including using client entertainment (30%), making cash payments (10%), giving personal gifts (10%), and misstating a company’s financial performance (4%).
Commenting on the report, Julie Fenton, Partner & Head of EY’s Fraud Investigation & Dispute Services said, “Our research shows a clear disconnect between the perception and reality of bribery and corruption in Irish business today. While it is encouraging to see that fewer Irish business leaders believe these practices are widespread, this is not reflected in our findings which show that when the pressure is on to pull through an economic downturn or meet financial targets, a high proportion of Irish executives would be prepared to let their ethics slide.”
The report also found that despite only 4% of respondents saying they would misstate financial statements, almost half (46%) of Irish business leaders identified actions that could be justified to meet financial targets, an increase from 43% in 2014. These actions included; providing more flexible product return policies (44%); extending monthly reporting periods (20%); changing assumptions determining valuations or reserves (14%); and backdating a contract (10%).
However, getting to the root of this behaviour within and organisation was recognised as a challenge, with almost a quarter (22%) of leaders saying that loyalty to their colleagues or company would prevent them from reporting an incident of fraud, bribery or corruption.
Inadequate anti-corruption defences
A significant proportion of Irish business leaders surveyed did not prioritise the identification of corruption red flags in their risk assessments. Only 42% included country specific risks and 36% industry specific risks in their forensic or anti-corruption due diligence.
Julie explained, “In today’s evolving business landscape, where companies experiencing growth are seeking opportunities to move into new markets, and high growth sectors such as life sciences continue to dominate, it is essential that leadership recognise the importance of conducting the appropriate due diligence to ensure their business can mitigate against corrupt behaviour, thus avoiding the associated business, financial and reputational risk.”