Education best to control corruption

David Seath.
David Seath.
Educating staff about what to look for was a key weapon in the battle against public and private-sector bribery and corruption, Deloitte Forensic associate director David Seath said yesterday.

Commenting on the 2015 Deloitte Bribery and Corruption survey, Mr Seath, of Dunedin, said companies needed to raise awareness of staff about any worrying signs of bad behaviour.

That included knowing what to look for, knowing what to do and creating a culture where staff were comfortable with reporting those findings without fear of getting a ''good bollocking'' for passing on their concerns, he said.

The people in the company were the best protection against bribery and corruption.

The message from the top had to be about what behaviour was unacceptable.

And from the bottom, the message had to be about awareness and the ''red flags'' relating to corruption.

The survey looking at NZ and Australian business found 34% of respondents working for organisations with offshore operations reported a foreign bribery or corruption incident happening some time over the past five years.

The survey canvassed the views of 269 public and private-sector organisations across New Zealand and Australia and found 23% of respondents reported experiencing one or more known instances of domestic corruption in the past five years.

Of those, more than half occurred in the past 12 months, the survey found.

Mr Seath said the 23% figure came as a surprise to those compiling the survey results.

The most common types of domestic corruption cited by respondents included undisclosed conflicts of interest, supplier kickbacks and personal favours.

More than a quarter (26%) of the reported incidents were from organisations with more than 5000 employees, while 68% of incidents involved only private/business individuals.

The survey showed no industry was immune from the taint of corruption, with all sectors experiencing at least some reported incidents in the past five years.

Domestic corruption was most often discovered through management reviews, internal controls and tip-offs from employees, the survey found.

In larger organisations with more than 5000 employees, the top discovery method was from tip-offs via a dedicated hotline.

Mr Seath said the findings highlighted the importance large organisations should place on enabling tip-offs to be made, appropriately received and then acted on.

''Hotline channels have increasing potential in terms of incident detection and deterrence.''

New Zealand had a ''snow white reputation'' as far as bribery and corruption was concerned, but companies dealing overseas needed to take more care in their dealings, he said.

Many companies knew kickbacks were being paid but remained reluctant to do anything about them.

Looking at bribery and corruption for organisations with offshore operations, the survey found 34% of respondents reported experiencing an offshore bribery and corruption incident in the past five years, up from 21% in 2012.

There remained a concerning number of organisations that did not have formal compliance programmes or did not discuss corruption risk at their highest levels.

Disturbingly, the survey found that only 31% of respondents with offshore operations reported having a comprehensive understanding of relevant legislation, up from 25% in 2012, the last time a similar survey was undertaken.

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