To combat corruption, businesses want more technology and training, survey finds

Companies around the world face corruption and need technology, training and insights into the varied legislation to strengthen countermeasures, according to The Global Anticorruption Survey conducted by the consulting firm AlixPartners.

The biggest concerns by far surrounded procuring and effectively using digital tools in the fight against corruption, where 81% of respondents said they lacked the appropriate IT systems and software to properly address corruption risks.

Two-thirds of executive respondents reported data privacy as their top concern, with 78% citing variations between different countries’ data privacy legislation as either somewhat or very challenging. Many international businesses have found it challenging to appropriately respond to European GDPR regulations on data privacy that put restrictions on what customer information can be gathered, retained and analyzed by countries, regardless of their legal jurisdiction.

(Source: AlixPartners)

The survey, which gathered responses last year from over 300 senior executives across 20 industries around the world, found that 40% of respondents saw significant risks to their business from corruption, and more than half believe they have lost business as a result of corrupt practices within their industry. And while more than 90% believe they have the resources they need to identify and address corruption risks, precautionary measures still often weigh down growth — more than 60% of respondents avoid particular business partners or even entire regions over corruption-related concerns. More than 30% of respondents said it was difficult or impossible to avoid corruption in Africa and the Middle East, while more than 20% said the same about Brazil, Russia, Southeast Asia, China and Mexico.

The survey said three in four executives have adjusted M&A activities to distance themselves from corrupt practices.

Use of whistleblower hotlines increased significantly over the previous year’s survey, with more than half saying they had received a tip in the past year, compared to just over 30% a year ago.

The biggest stumbling block reported to AlixPartners by survey respondents was accounting for, and complying with, the patchwork of anticorruption regulations in different regions around the world. New legislation passed within the last five years has affected more than half of all respondents, and the same number — just half — have integrated policies that deal specifically with standards from the largest economies including the U.S. Foreign Corrupt Practices Act, Foreign Account Tax Compliance Act and those laid out by the Office of Foreign Asset Control and the Organization for Economic Co-operation and Development. Less than a third have addressed the UK Bribery Act passed in 2010.

Half of all companies surveyed said they are leveraging external advisers in an effort to strengthen their anticorruption programs around the globe.

Distributing anticorruption information also has been a challenge for some respondents. Ten percent report distributing anticorruption policy only to certain employees, and 16% fail to fully define government related entities and individuals within their region, making it much more difficult to comply with organizational policies.

Surprisingly, nearly 10% neither audit nor train foreign subsidiaries in anticorruption practices, and nearly 20% have never conducted a full review of their anticorruption compliance policies.

Other top corruption-related concerns included money laundering, export controls and compliance with sanctions deep within the supply chain. A March 2019 study performed by the OECD identified several ways blockchain technology can be leveraged in the fight against corruption, but also warned that blockchain tech was not a catch-all solution and that more maturity will be required before governments around the world are able to effectively integrate blockchain into their legislation.

When asked by AlixPartners what tools had been most useful in strengthening their anticorruption programs, several were cited consistently. Ensuring all employees receive anticorruption training was an essential part of maintaining a uniform policy throughout the organization, with compliance executives typically seen as the responsible party for anticorruption information dissemination and enforcement. Vigorous internal audits were encouraged, carried out by a designated audit committee, supplemented by real-time monitoring of suspicious behavior.

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