Confronting corruption*

The business case for an effective anti-corruption programme

As global executives continue to seek growth opportunities in challenging markets, exposure to the reputational, legal, operational and financial impacts of corruption will continue to rise. Recognising this situation, business leaders are searching for risk mitigation strategies that also contribute to their corporate sustainability efforts.

Highly publicised scandals and expectations of increased government enforcement have established corruption risk as an inescapable reality in the minds of executives. While there is firm commitment to tackling corruption, companies need to do more to protect themselves. The gap between corruption risks and companies’ anti-corruption programmes, as well as guidance to remedy it, is explored in PwC's Confronting corruption* report.

About the Report
PwC's Confronting Corruption* report examines what companies are currently doing to manage the risk of corruption and the steps they can consider to better protect themselves in the future.

The increased focus on the private sector's role in fighting corruption led PwC to commission The Economist Intelligence Unit to conduct a global survey and interviews with senior executives and anti-corruption experts. 390 senior executives participated in the survey. Survey findings were supplemented with in-depth interviews with 36 senior executives and experts in anti-corruption efforts from 14 countries.

Overall, the survey indicates that business is more keenly aware than ever of the dangers of corruption. Yet, companies still need to expand the scope and rigor of their efforts to manage corruption risks with well-designed controls that are clearly communicated and enforced.

Summary findings:

  • There is a strong business case for having an anti-corruption strategy
  • An increasing number of companies recognize their vulnerability to corruption and the benefits of effective anti-corruption programmes and controls
    • Sixty-three percent indicated that they had experienced some form of actual or attempted corruption
    • Thirty-nine percent say their company has lost a bid because of corrupt officials
    • Sixty-five percent of respondents believe a level playing field is crucial to their company’s future business activities.
    • Reputational (brand) damage from corruption can be crippling
    • Having an anti-corruption programme in place and publicizing it is seen as valuable or very valuable to a company's brand by 86% of respondents.
    • Fifty-five percent say the most severe impact would be to the corporate reputation. Greater than the combined total of those who say legal, financial and regulatory impacts would be the most severe.
  • Companies are losing real and significant business opportunities because of corruption risks;
    • Almost 45% of respondents have not entered a specific market or pursued a particular opportunity because of corruption risks
    • Forty-two percent believe their competitors pay bribes.
    • More than 70% believe a better understanding of corruption will help them compete more effectively, make better decisions, improve corporate social responsibility and enter new markets
  • Despite being aware of corruption, many companies underlying policies and controls currently do little to identify and mitigate risk due to poor design or implementation.
    • While 80% say they have some form of an anti-corruption programme in place, only 22% are confident of their effectiveness.
    • Slightly less than half say their programme is clearly communicated and enforced
    • Only 40% of respondents believe their current controls are effective at identifying high-risk business partners or suspect disbursements