Companies must make more effort to stamp out corruption within their businesses to avoid falling foul of regulators, according to new research.
An international survey of more than 300 senior in-house lawyers, conducted for consulting firm Control Risks by the Economist Intelligence Unit, reveals that just over half (52%) of companies in the financial services sector have procedures in place to check the background and reputation of business associates in local and foreign markets.
This is despite the fact that authorities regard such due diligence as vital to prevent corruption.
Meanwhile, only 44% of financial services companies surveyed have policies banning ‘facilitation payments’ to suppliers and government agencies.
A quarter (24%) do not have formal policy statements forbidding their employees from paying bribes while 56% fail to include a clause in contracts with subcontractors and consultants that forbids them from paying bribes on the company’s behalf.
Less than a third (30%) of financial services companies have an anti-corruption training programme for all employees and fewer than one in 10 (8%) offers specialised training for employees operating in high-risk areas.
Inadequate internal processes mean that financial services companies continue to be vulnerable to employees paying bribes without their knowledge. But bribery risks are very real. Almost half (49%) of respondents thought it was possible, somewhat or very likely that they will need to investigate a suspected violation of anti-bribery laws in the next two years.
Commenting on the survey’s findings, Richard Fenning, CEO of Control Risks, said: “Companies in the financial services sector are used to strong regulation, but it appears they are lagging behind with regards their anti-corruption preparedness. The multi-jurisdictional reach of the Foreign Corrupt Practices Act and UK Bribery Act means that financial services are especially at risk – it is therefore of paramount importance that they have robust practices to ensure their continued compliance. The impact of not having proportionate anti-corruption policies can be severe – threatening their reputation and operations.”
Sally Percy is editor of The Treasurer