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News : Irish Last Updated: Jul 4, 2011 - 7:23 AM

Incidence of corporate fraud in Ireland halved in last 12 months; Over 25% of senior managers said offering cash payments acceptable to win business
By Finfacts Team
Jul 4, 2011 - 5:14 AM

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Incidence of corporate fraud in Ireland have reduced by half in the last 12 months as fraud detection processes are introduced by businesses attempting to reduce financial loss. The findings come from data contained in the latest Ernst & Young European Fraud survey (pdf) released in Ireland today. Just 16% of Irish businesses confirm that they have experienced incidence of serious fraud in comparison to more that 30% surveyed in 2010.  Over 25% of senior managers said offering cash payments is acceptable to win business.

Findings show that Irish businesses have been amongst the most proactive across Europe in terms of increasing fraud detection devices within their organisations over the last 12 months. 37% of Irish businesses have increased fraud detection in the last year, just marginally behind Turkey (42%) and Hungry (38%) but ahead of the European average (29%).

However, today’s findings also confirm several gaps exist which continue to limit the effectiveness of anti-corporate fraud policy in Ireland and particularly, day-to-day adherence and enforcement of policies across the Irish business community.

Despite the growth in corporate fraud strategy, today's report says a significant number of business professionals continue to believe that some degrees of unethical behaviour is permissible, if engagement in such activity helps them achieve business growth.  

Over a quarter of all senior managers and over a third of employees confirmed that activity including offering personal gifts, offering free entertainment and even offering cash payments was acceptable in order to win or retain new business.  This is consistent with the findings across Europe where more than a third of employees polled at large companies across Europe are prepared to offer cash, gifts or entertainment to win business and nearly half are not aware of an anti-bribery policy at their company.

Employees in Greece (44%) and Russia (39%), for example, are most likely to pay cash bribes while those in Norway (6%) are among the least likely. Overall, two-thirds acknowledge bribery and corruption are widespread in their country and 40% say the problem has worsened over the last two years of economic downturn.

Commenting on the results, Julie Fenton Fraud Investigation and Disputes partner with Ernst & Young says: “What’s clear is that despite more widespread introduction of corporate fraud policy, there remains much work to be done by business leaders to clearly articulate how such anti-fraud policies translate into acceptable day-to-day business behaviour. This includes clearly communicating what is acceptable and what is not, the consequences for employees who do not adhere to these rules and regulations and following through on disciplinary procedures when breeches occur”.  

Failure of compliance leadership from management

The report says employees across Ireland hold boards and senior management accountable for establishing and enforcing appropriate corporate behaviour. Over 80% of those surveyed think that senior management should face criminal charges for failing to take effective measures to prevent fraud, bribery or corruption somewhere in their organisation

Irish businesses received the most communication across Europe regarding anti-corporate fraud policy over the last year. 60% of those surveyed confirm that they have received anti-bribery and anti-corruption policy training (European average 49%).

However, employees in Ireland are also less than convinced by management’s commitment to enforcing such policies or the consequences for breaking these rules. A quarter of respondents do not trust in management to behave with integrity themselves in terms of adhering to corporate fraud polices. A third confirmed that no one in their organisation has been penalized for breaching anti-corporate fraud policies; in fact, a third also claim to have seen co-workers who have engaged in fraudulent activity promoted.  

Fenton comments: “A declining focus on enforcement of anti-fraud measures and a continued tolerance of unethical behaviour inevitably increases the risk of fraud, bribery and corruption. Reinvigorating the commitment by management and their Boards to ethical growth should be an urgent priority, and will be appreciated by employees and stakeholders alike.”

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© Copyright 2011 by Finfacts.com

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