“The scale of bribery and corruption has shown no improvement globally since 2012, despite the unprecedented level of enforcement activity and introduction of new corporate criminal liability laws in that time,” finds a survey carried out by Ernst & Young globally.  

According to the 15th EY Global Fraud Survey, despite the best efforts of regulators and law enforcement agencies around the world, and the imposition of more than $11bn on financial penalties since 2012, 38% of executives remain convinced that corrupt practices and bribery are still taking place.

Gérard Zolt, fraud investigation & dispute services leader at EY Luxembourg, said, “The lack of improvement in global levels of corruption over the last six years shows that unethical behavior in business remains a daunting challenge, despite intensified global enforcement.”

He explained that as long as these practices continue, businesses remain highly vulnerable to significant financial and reputational harm.

“Management teams must identify and address the root causes of unethical conduct in their organization. Compliance programs need to keep pace with the impact of rapid technological advancements and the increasingly complex risk environment on business operations. More robust risk management should be considered a strategic means of improving business performance.”

The survey reports that the difference in levels of corruption between countries remains significant, with 20% of respondents in developed markets indicating that bribery and corruption occurs widely in business, compared with more than half (52%) of those in emerging markets.

Regions in which corruption risks were higher than the global average included Central and Eastern Europe (47%), the Middle East (62%) and Latin America (74%), despite improved anti-corruption legislation and more active enforcement in some countries. 

In the US, where enforcement of the Foreign Corrupt Practices Act (FCPA) intensified in the mid-2000s, perceived levels of corruption fell this year to 18%, an improvement from 22% in 2014. It remains to be seen what impact an eventual introduction of a similar updated Luxembourg anti-corruption legislation would have on Luxembourg businesses, especially taking into account that the vast majority of Luxembourg companies are export-oriented.

Integrity sits high on the board agenda, the survey finds, with 97% recognising the importance of their organisation being seen to operate with integrity. The report suggests that organisations need to make it clear that acting with integrity is everyone’s responsibility, and while that includes the importance of management setting the right tone from the top, it also involves individual employees. The findings show that 22% of respondents feel that individuals should take primary responsibility for their organisation behaving with integrity, while 41% say it is management’s primary responsibility.

For Luxembourg, the percentage believing that it is management’s responsibility is in the top10 percentage, while the percentage believing the board has a responsibility is one of the lowest in the survey.

Another interesting aspect of the Luxembourg part of the survey was on the question “Which of the following pose the greatest risks to your business?”, cyber threats and cyberattacks only came in second position and was surpassed by the impact from complex and changing regulatory environment.

Zolt says: “The pressing challenge for management and the board, therefore, is to build a robust culture of integrity and compliance in which employees do the right thing because it’s the right thing to do, and not just because a company code of conduct says they should. 6% of the Luxembourg respondents recognize that they have experienced significant fraud in the last 2 years, which classifies Luxembourg at the same level as France, Switzerland or the US.”