Corruption is a growth business

May 19, 2013 12:07 am | Updated June 13, 2016 05:41 am IST

Bribery scandals have dominated headlines in several countries in recent months, among them India and Nigeria. International enforcement of anti-bribery laws has been increasing in the United States and major European countries.

A new survey of corporate officials and employees in 36 countries — in Europe, Africa and the Middle East, as well as India — indicates that there is plenty of corruption that needs investigating.

Over all, 20 per cent of the respondents said they knew of incidents at their own companies within the previous year that could be construed as cooking the books — moves to either understate expenses or overstate revenue. Among senior managers and directors, the figure was 42 per cent.

The survey was conducted late last year by Ipsos, a market research firm, on behalf of Ernst & Young, a major accounting firm.

Ernst did not break down responses to the cooking-the-books question by country, but indicated that managers from emerging markets were more likely to say that had happened than were managers from more developed economies.

The firm did provide country-by-country results for some questions, as can be seen in the accompanying charts. Asked if companies in their countries “often report their financial performance as better than it is,” more than half the respondents in nine countries — Nigeria, Slovenia, Russia, Spain, Croatia, India, Serbia, Kenya and Austria — said that they did.

At the other end of the scale, fewer than a quarter of respondents in eight countries — Finland, Norway, Switzerland, France, Romania, Sweden, Hungary and the Netherlands — said that happened.

The survey was commissioned by Ernst’s fraud investigation and dispute services group, which does not perform standard corporate audits but instead is hired by companies to look for signs of corruption or fraud in their own operations. It did not include either China or the United States.

David Stulb, the global leader of that group, said it was growing in part because many companies were worried about enforcement of the American Foreign Corrupt Practices Act, which bars the bribing of foreign officials, and of similar laws in other developed countries. Those surveyed included employees and officials of overseas subsidiaries of multinational companies. The respondents were promised anonymity, Ernst said.

The survey revealed what Ernst called a “corruption perception gap” in many countries, where respondents said bribery and corrupt practices were far more common in other parts of their country than they were in their own industry. At the extreme, 94 per cent of respondents in Kenya thought corruption was widespread in the country, but only 34 per cent thought it was a problem in their own industry.

The responses indicated that corruption and bribery are rare in the Scandinavian countries, but common in some Southern and Eastern European countries, as well as in India, the Middle East and Africa. — New York Times News Service

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