Australian executives are seeing a sharp rise in bribery and corruption

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More than one in four Australian executives believe bribery and corrupt practices are more widespread now than two years ago.

And the pressure they face at work brings out the worst in some of the executives with 25% justifying unethical behaviour to meet financial targets.

The proportion of Australian executives who believe bribery and corrupt practices are widespread has risen to 28% today from just 8% in 2014, according to the findings of EY’s 14th Global Fraud Survey. The Australian results are based on 40 local interviews.

This increase is in contrast to the global results which remained relatively flat at 38% in 2014 and 39% in the latest survey.

The 2016 report highlights a global clamour for enhanced transparency at a time of increased geopolitical tensions and heightened volatility in financial markets.

The escalating threats of cybercrime, terrorist financing and the revelations regarding widespread possible misuse of offshore jurisdictions have increased pressure on governments to act and companies to identify and mitigate fraud, bribery and corruption.

Rob Locke, EY’s fraud investigation managing partner for Oceania, says business leaders are right to be focused on securing a deeper understanding of their clients, partners and suppliers.

“While the proportion of Australian executive who believe that that bribery and corrupt practices happen widely in their country is still lower than the global average, the significant increase reported over the past two years would suggest executives locally are waking up to the risks,” he says.

“In a question introduced in this year’s survey, 32% of respondents globally and 25% in Australia reported that they have had personal concerns about bribery and corruption in their own workplace.”

A quarter of the Australian respondents admitted they could justify unethical behaviour to meet financial targets.

And globally, 16% of finance team members below the CFO were ready to justify making a cash payment to win or retain business.

“Increased levels of global cooperation between law enforcement agencies are making it harder for fraudsters and bribe-payers to evade prosecution,” Locke says.

“However, with respondents indicating that such misconduct is showing no sign of abating, companies continue to be exposed to major risks driven by the illegal actions of a small minority of employees.”

The research also shows Australian companies are frequently failing to take steps to reduce risk exposure. One in five do not assess country-specific corruption risks before making investments and a quarter do not assess industry risks.

“On a more positive note though, the survey found Australian companies were the most likely to identify third parties, such as vendors, agents, distributors and joint venture partners, as part of their anti-corruption due diligence,” Locke says.

Only 3% of Australian respondents said they didn’t do this, much lower than the global average of 19%.

According to this year’s survey, 80% of Australian companies have whistleblower hotlines in place. The global average is 55%.

The EY survey of nearly 3,000 senior business leaders from 62 countries and territories, including Australia, was conducted between October 2015 and January 2016.

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