More than one in four business leaders believe bribery and corruption is rife in the UK, according to survey conducted by accountants EY.
Twenty-eight per cent of UK respondents said corruption was widespread – an increase from 18% a year earlier – although lower than the 39% average of respondents to the survey conducted in 62 countries.
“Our survey finds that more than one in four executives in the UK believe that bribery and corrupt practices happen here, a worryingly high number in a country that prides itself on its strong corporate governance,” said EY’s Jim McCurry.
Ninety-eight per cent of UK respondents to its 14th annual global fraud survey also said they recognised the importance of being able to establish the ownership of entities with which they are doing business – a factor highlighted in the publication of the Panama Papers earlier this month.
Overall, 91% of the 3,000 senior executives from 62 countries who took part in the survey supported enhanced beneficial ownership transparency.
Last week in Washington, George Osborne and his counterparts from France, Germany, Spain and Italy announced new rules that will lead to the automatic sharing of information about the true owners of complex shell companies and overseas trusts.
The chancellor said the enhancing regulations were “a hammer blow against those that would illegally evade taxes and hide their wealth in the dark corners of the financial system”.
The survey, conducted before the details of 11.5m files from the Panamanian law firm Mossack Fonseca were made public, also found that half of all respondents were prepared to justify unethical behaviour to meet financial targets. This was a greater proportion than the 36% that could justify such behaviour to help a company survive in an economic downturn.
The EY report said: “Worryingly, deeper analysis of our survey results identifies that many respondents who are [chief financial officers] and finance team members, individuals with key roles in protecting companies from risks, appear ready to justify unethical conduct. The apparent willingness of these respondents to act unethically when under financial pressure is concerning. Could certain compensation arrangements be encouraging such behaviours?”
The survey found that respondents, though, believed that bribery and corruption did not take place in their own sectors. While 39% globally said they believed it happened in their country, only 11% said they thought it was the case in their sector.
“Bribery and corruption continue to represent a substantial threat to sluggish global growth and fragile financial markets,” the report said. “Despite increased regulatory activity, our research finds that boards could do significantly more to protect both themselves and their companies.”
Respondents in the UK also regard cybercrime as a high risk, with 80% of respondents citing it as a concern – more than elsewhere in the world.
“With the continuing enforcement of anticorruption measures, coupled with recent revelations about the misuse of offshore financial structures, business leaders here need to be focused on securing a deeper understanding of their clients, partners and suppliers. Enhanced transparence is only likely to rise up the political and public agenda, both here and in the rest of the world,” said McCurry.
He said EY, which itself has a tax practice, complied with ethical standards.
EY conducted 2,825 interviews 62 countries with executives responsible for tackling fraud – 50 of them were in the UK.
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