Bad reputation: The impact of bribery & corruption on ANZ businesses

The damage bribery and corruption can cause to an organisation transcends far beyond any immediate financial losses.

Potential damage could have a deep and lasting impact on a business' reputation, culture, regulatory standing and even long-term profitability.

This is according to the recently released report, the Deloitte Bribery and Corruption Survey 2017.

Overall, most respondents say damage to their reputation is the biggest risk associated to bribery and corruption, whether that's domestic (65%) or international (70%), states Deloitte's Australian forensic leader Chris Noble.

Deloitte New Zealand Forensic leader Barry Jordan explains that organisations need to be proactive and vigilant to have any chance of combating bribery and corruption, otherwise they will simply fall behind.

"Although we are getting much better at identifying the symptoms of commercial and public sector bribery and corruption, whether that is through traditional or social media channels, we have still a lot to learn," says Jordan.

Noble says 77% of respondents believe the best way to prevent domestic corruption is to get the organisational culture right.

"They also selected 'tone at the top' (15%), followed by getting processes right (14%) as the three most important factors organisations in our region need to improve their skills and prevent bribery and corruption incidents," continues Noble.

There is a rise in the awareness around bribery and corruption which is being driven by increased requirements from Anti-Bribery and Corruption (ABC) regulation, as well, in some cases, by using advanced detection and training systems.

"Global uncertainty is also increasing this focus," says Noble.

"Our cross-Tasman regulators are actively enforcing agendas to minimise money laundering, terrorist financing, corporate misconduct and fraud. There is also greater international cooperation, collaboration and benchmarking between law enforcement agencies to facilitate cross-jurisdictional investigations."

"This awareness is brought out in our 2017 survey by the fact that tip-offs are still the most common method of detection," adds Jordan.

Jordan says that although Boards and executives need to set the tone (14%), more importantly, middle management must effectively execute ABC (anti-bribery and corruption) programs on the ground.

Noble and Jordan both agree that in such volatile and uncertain times, companies cannot afford to be overconfident when it comes to preventing, detecting and responding to foreign and domestic bribery and corruption.

"The message from lawmakers is clear – bribery and corruption are the focus, and cutting corners to save time is not an acceptable way of doing business. Businesses and the regulators in Australia and New Zealand recognise the risk and will simply not tolerate bribery and corruption," concludes Jordan.

"The reality is whether you choose to adapt to developing expectations, or deploy the bare minimum to remain compliant in a regulatory sense, will determine whether you stay one step ahead of the ABC edge.

45% of respondents expect to implement or upgrade their ABC framework in the next five years.

Key findings from the Deloitte Bribery and Corruption Survey 2017 include:

• In 2016 Transparency International's Corruption Perceptions Index, ranked New Zealand and Denmark jointly as being perceived to have the least corrupt public institutions in the world
• Despite this, New Zealand had its biggest ever bribery prosecution, 'Borlase and Noone', in 2016. This was the first prosecution where the judgement included specific guidance for organisations looking at what should and should not be offered (or accepted) by New Zealand public officials.
• New Zealand is clarifying penalties for foreign corruption and setting circumstances in relation to the liability for companies.

• Australia's first Open Government National Action Plan, an ambitious agenda that includes the improvement of business transparency and accountability, open data and digital transformation, access to government information, public sector integrity and public participation engagement
• New false accounting legislation has been introduced
• The Australian Attorney-General's proposed amendments to existing foreign bribery offences now include recklessness and a new corporate offence of failing to prevent foreign bribery
• A Senate Committee into the adequacy of the Australian legislative, institutional and policy framework in addressing corruption
• The appointment of a federal national integrity commission
• The consideration of Deferred Prosecution Agreements as a tool to combat corporate crimes
• Proposed whistle-blower protection reforms for corporate, public and not-for-profit sectors, with an inquiry due to report June 2017
• Proposed changes to beneficial ownership legislation, where submissions are under consideration and reporting is expected later this year.