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Kroll, a division of Duff & Phelps, the global leader in risk mitigation, investigations, compliance, cyber resilience, security and incident response solutions, is urging business leaders to take a proactive stance against corruption after its Global Fraud and Risk Report revealed that over a quarter (26%) of British firms experienced incidents of bribery and corruption in the last 12 months, more than the global average of 23%. This guidance coincides with the anniversary of the Foreign Corrupt Practices Act (FCPA), which was brought in over 40 years ago and prohibits U.S. firms from paying bribes to foreign officials to help further a business deal. Other regulations, including the UK Bribery Act (2010), have since been enacted to help tackle the issue at a global level.
Implemented in 1977, the FCPA stipulates that violations of anti-bribery provisions can result in individuals facing criminal fines of up to $100,000 per violation and five years imprisonment. Breaching accounting and record-keeping provisions could result in criminals facing fines of up to $5 million per violation and 20 years’ imprisonment. In 2019, 14 firms have been penalised for non-compliance.
However, it’s clear that more needs to be done to combat corruption at a business level. To strengthen their defences, firms need to build and maintain a strong corporate culture to help prevent and detect corruption risk.
Kroll’s annual Global Fraud and Risk Report, based on research conducted by Forrester Consulting, examines the current global risk landscape in order to determine the biggest risks that global companies face, and the steps being taken to prevent, detect and respond to them.
The research also highlighted the fact that firms recognise the importance of combatting corruption, with 64% of UK businesses outlining it as a key risk priority. However, many firms lacked confidence in their ability to mitigate this threat, with nearly one-third (31%) of business leaders saying they were not confident in the effectiveness of their firm’s current anti-bribery and corruption controls.
While internal mechanisms are vital to detect corruption, their effectiveness may be impacted by a company’s culture. Cultures in which checks and balances are seen to be a hindrance are more vulnerable to adverse incidents, as opposed to cultures that value transparency and accountability.
Through its work with businesses and governments, Kroll has identified six foundations of a culture of integrity: tone from the top, resourcing, processes and controls, education, performance goals and incentives, and response and remediation. By focusing efforts on these six areas, businesses will be able to build and sustain a strong, transparent and accountable culture, and ultimately help better mitigate the risk of corruption.
Zoe Newman, Managing Director, Business Intelligence and Investigations at Kroll, comments:
“Bribery and corruption are pervasive issues for companies and need to be tackled effectively, with strong risk mitigation processes put in place. The survey found that many firms are not confident in relying solely on internal controls to mitigate risk. This is reflective of an increasing trend amongst our clients in requesting proactive bribery and corruption risk assessments, using data analytics, to complement existing frameworks. However, without a rock-solid culture to support processes, even the most robust risk management strategy will be ineffective. Using internal communications and training, and setting a clear tone from the top, leaders can promote a culture of responsibility and integrity—and that goes a long way in mitigating corruption risk. ”
