Corruption in NZ companies on the rise, report finds

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Research into businesses across Australia and New Zealand has found that 34% of companies with offshore operations have encountered a foreign bribery or corruption incident over the past five years – up from 21% in 2012.
 
The 2015 Deloitte Bribery and Corruption Survey had respondents from 269 organisations in New Zealand and Australia, finding that 23% had experienced at least one case of domestic corruption since 2010. More than half of these transpired during the last year.
 
The survey was the second of its kind conducted by Deloitte, but was the first to ask questions about domestic bribery and corruption.

“Almost one in four organisations reporting an incident is a significant level of corruption,” Barry Jordan, lead forensics partner at Deloitte, told The New Zealand Herald. “There is no longer any excuse for complacency against this risk. Apart from the legal ramifications, which can include heavy fines or even jail time, the long term reputational damage from corruption can have serious long term flow on effects on an organisation's bottom line.”

According to the report, the most common types of corruption cited were undisclosed conflicts of interest, supplier kickback and personal favours.

Over 25% of the incidents occurred within organisations with over 5000 employees, while 68% of incidents involved private or business individuals.

It was also found that corruption was occurring within all sectors.

The whistle was most often being blown on domestic corruption in management reviews, internal controls and tip-offs from employees; but in larger organisations with more than 5000 employees, the most common way of informing employers of corruption was via a dedicated hotline.

“Hotline channels have increasing potential in terms of incident detection and deterrence,” Jordan said, adding that the report’s findings emphasised that large organisations should provide a platform to enable tip-offs to be made.

Several countries, including China, India and Indonesia, have begun to increase their efforts to combat corruption, the report stated.

However, just 31% of respondents with offshore operations reported having a comprehensive understanding of relevant legislations.

Forty per cent also reported either not having or not being aware of a formal compliance program to manage corruption risk, while almost one in five participants operating in high risk jurisdictions did not discuss the risks at management or board level.

“A large percentage of respondents do not have adequate systems in place to identify foreign bribery risks, nor have they carried out foreign bribery and corruption risk assessments,” said Julie Read, chief executive and director of the New Zealand Serious Fraud Office. “This is surprising given the success of Kiwi companies overseas, in jurisdictions identified by Transparency International as high risk, and where UK, US and NZ legislation all apply. We see the potential for an increase in foreign bribery cases given this profile and would encourage all companies trading in international markets to be proactive in taking steps to identify and respond to risks of foreign bribery in their organisations.”
 

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