Companies find complying with anti-corruption regulations more challenging than ever, according to KPMG’s latest ABC report 2015.
Companies find complying with anti-corruption regulations more challenging than ever, according to KPMG's latest Anti-Bribery and Corruption Report 2015
Companies are finding it harder to deal with Anti-Bribery and Corruption (ABC) issues, according to KPMG's latest ABC report, Anti-bribery and corruption: Rising to the challenge in the age of globalisation. Two trends are driving these changes. First, governments around the world are tightening existing ABC regulations and introducing new ones. Second, in a globalising economy, companies rely more than ever on third parties in far-flung parts of the world, often where there is high corruption risk.
"Despite great efforts to build ABC programmes, it's clear that there remain gaping holes in them," says Lem Chin Kok, Partner, Forensic, KPMG in Singapore. "The problem is particularly acute in the management of third parties, who are outside the organisation's direct control, making their conduct harder to manage and track. Respondents to the survey admit third parties are their biggest challenge in the field of ABC, but they could do more to develop a culture of compliance both among their employees and their vendors and other business associates."
International companies operating in ASEAN have consistently cited corruption as the most significant challenge to doing business in this region.1 They cite the failings in the fair and efficient enforcement of the law and pressure to bribe officials and/or customers for approvals and contracts as the greatest risk to their longterm business operations in ASEAN. In Singapore, the Government announced in January 2015 that the Prevention of Corruption Act would be reviewed, in a move to bolster Singapore's leading reputation for incorruptibility.2
The worldwide survey was conducted by KPMG with Singapore Management University to assess the relative strengths and weaknesses of companies' ABC programmes. 659 companies took part, including 72 from Asia Pacific, of which 23 came from Singapore.
The main findings of the survey include:
"Despite efforts at improving ABC policies and controls, companies continue to fall foul of tough regulations. As a result, they are fined heavily, their reputation is damaged and increasingly individual executives are targeted by regulators and prosecutors to account for their organisations' misdeeds," says Lem Chin Kok, Partner, Forensic, KPMG in Singapore.
"Much has been said about 'tone at the top', yet we continually see failings at middle and lower management level, which leads to the conclusion that not enough is done to ensure that the message from senior management results in 'tone at the middle'. Companies will continue to fall short if they treat management leadership as talk rather than action and involvement."
1 ASEAN Business Outlook Survey 2016, American Chamber of Singapore and U.S. Chamber of Commerce
2 'Singapore's anti-graft laws: Five possible areas for reform,' The Business Times, January 20, 2015