High-profile regulatory enforcement has been taking place since the 2009 crisis highlighted gaping holes in the system, but most of this action has centred on banks and insurers. The challenge remains closing loopholes across all business sectors before they lead to another crisis.
Cliffe Dekker Hofmeyr Competition Director Chris Charter said corruption was bad for the economy and that businesses that chose to pay bribes to win tenders or commit other corrupt practices were on a slippery slope.
"Once you pay a bribe, the risks of being blackmailed or extorted rise. Once a company has done it, they are asked for more and more. A corrupt country doesn't grow and it's bad for the morale of a country," he said.
The EY survey placed SA third on the overall perceptions of bribery and corruption, behind Nigeria (88%) and Kenya (87%) and just before Greece at 72%. Namibia closed the top five with a reading of 72%.
EY Director for Fraud and Investigation Sharon van Rooyen said that there was a gap between perceptions and what was happening on the ground, but a number of very concerning trends were emerging.
While 7% of global executives said they had been asked to pay a bribe in a business situation, this number was 10% in SA. More executives in SA were now willing to bend the rules because of financial pressures.
The survey found that while only 2% of executives were willing to justify incorrect financial statements in the previous survey, 10% were willing to do it now. And 16% of executives were willing to use cash payments to gain favourable treatment, for example by buying gifts or paying for trips, up from 6% a year ago.
"As much as I hate to say it, corruption is on the rise, it's a growth industry," said Charter adding that it was in firms' interests to improve internal control processes and corporate governance.
"You can't under-estimate the costs of not doing so," he said.
About 50 executives were interviewed in each country, with the survey spanning 2,700 executives across 59 countries.
Notably, 21% of global CEOs said they had been approached to pay a bribe and nearly 40% of all global respondents believed bribery and corruption were widespread in their country.
According to the survey, compliance fatigue within businesses appeared to have set in at a time when they could least afford it.
"South African businesses also tend to under-estimate the threat posed by cybercrime, with only 48% seeing it as a risk. This is somewhat troubling as cybercrime is definitely on the rise," said Van Rooyen.
Source: Business Day via I-Net Bridge
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