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
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