Globalization has entered a new phase, posing greater challenges for anti-bribery and corruption (ABC) compliance than ever before. Two factors are creating new issues for companies, according to a new report by KPMG International. First, a growing number of governments around the world are tightening ABC regulations or introducing new ones. Second, as companies globalize their operations, they rely more heavily on third-parties than before to do business in far-flung parts of the world, often in areas where there is a high risk of corruption.
A survey of respondents around the world, conducted by KPMG International, shows that companies are rising to the challenge but that a great deal more needs to be done to create a sturdy ABC compliance structure. For full details, read the report Anti-bribery and corruption: Rising to the challenge in the age of globalization.
“Despite greater efforts to build ABC frameworks, it’s clear that there are gaping holes in them,” says Petrus Marais, Global Leader of Forensic Services for KPMG. “The problem is particularly acute in the management of third-parties who increasingly act as conduits for bribes, making it harder to track. Respondents to the survey admit it’s the biggest challenge in the field of ABC, but they are not doing enough to develop a culture of compliance both among their employees and their vendors and other business associates.”
The main findings of the survey include:
“Despite better controls and stronger ABC policies, companies continue to fail to comply with the tougher regulations, and are fined heavily as a result,” says Jimmy Helm, Global Leader of Anti-Bribery & Corruption Services, KPMG. “Much has been said about ‘tone at the top’, yet we continually see failings at middle and lower management level, which leads one to conclude that there is not enough focus on ‘tone at the middle’. Companies can have a perfect ABC program and yet continue to fall short, if they do not improve the way they do business.”
The survey targeted 659 respondents covering 64 countries, with 140 respondents based in Central & Eastern Europe (including Russia), 113 in Western European countries (excluding the UK), 105 from the Asia – Pacific region, 66 respondents in the US, 64 from South America (31 in Mexico), 61 in South Africa and 41 in the UK. Industries were widely represented: banking comprised 20 percent, life sciences 12 percent, manufacturing 10 percent and energy & natural resources 8 percent. The survey was completed in October, 2014.
KPMG is a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 155 countries and have 174,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.