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Compliance failings fueling corruption

Compliance failings fueling corruption

Only a tiny minority of senior business executives are confident that Australian companies are compliant with anti-corruption legislation.SYDNEY: According to a poll of 40 senior business…

Only a tiny minority of senior business executives are confident that Australian companies are compliant with anti-corruption legislation.

SYDNEY: According to a poll of 40 senior business decision makers, including heads of compliance and risk managers across industries including financial services, insurance and real estate, an overwhelming 95 per cent believe that corruption is more likely to occur in the current economic environment, particularly as organisations look to do business with emerging markets in an attempt to cut costs. This is despite only 12 per cent of respondents having full confidence that Australian companies currently comply with Australia's anti-corruption legislation.

According to the Dow Jones study, titled Australian Anti-Corruption Compliance Perceptions, 77 per cent of the executives believe there is now a greater focus on anti-corruption as a result of the risks associated with the GFC, such as growing trade relationships with emerging markets that still have a high level of state-owned companies.

Unfortunately, as Dow Jones Risk and Compliance Solutions specialist Richard Butler noted, this focus on anti-corruption has not been converted to companies taking the necessary actions to ensure they comply with relevant legislation.

"As a result of several Federal Government initiatives to stimulate the economy, it is likely that the additional funding will also stimulate corruption," he said. "While perhaps not intentional, we are seeing a greater incidence of corrupt practices such as corporate gift-giving that can ultimately influence the decision-making process. This is a very serious issue."

Alarmingly, almost half (48.5 per cent) of survey respondents indicated that those in senior leadership positions in Australian companies only have minimal knowledge of anti-corruption legislation, leaving the door open to the risk of judgment errors. Thirty-five per cent believed board members and senior executives did not supply sufficient resources to combat or prevent corrupt practices.

"Anti-corruption enforcement needs to come from the top," Butler said. "Australian senior executives need to realise that anti-corruption is a business issue and not just a compliance issue that is relegated to the compliance manager. The reputational and financial cost of non-compliance is far greater than the alternative."

Acts such as the Crimes Act 1914, the Criminal Code Act 1995 and Proceeds of Crime Act 2002 list a number of corruption offences including bribery of a public official, falsifying a document and forgery. In addition, Australia has become party to various international conventions to fight corruption, including the United Nations Convention Against Corruption and the Organisation for Economic Corruption and Development Convention on Combating Bribery of Foreign Officials in International Business Transactions.

"While trust needs to be inherent within every company, senior executives cannot rely on ethics alone to stamp out corrupt practices," Butler warned. "The backbone of any compliance strategy is sound technology that can deliver the necessary checks to clarify the grey areas that exist around corruption and corporate culture."

- Mark Phillips

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Compliance failings fueling corruption
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