Dubai: Many businesses in the UAE, as well as in other parts of the Middle East and North Africa, don’t have any anti-bribery policy in place, making them vulnerable to fraud and corruption.
In a fraud survey conducted by EY, a financial transaction advisory services company, only 52 per cent of 3,800 employees of large companies in 38 countries, including UAE, Saudi Arabia, Oman and Egypt, said that they had an anti-bribery or anti-corruption policy and code of conduct in place.
While a code of conduct is often absent in many companies, the majority of the employees in the Middle East and North Africa (67 per cent) believe that the simple acts of offering personal gifts, entertainment or cash are harmless or justified, if it they help a business survive.
The lack of policies that combat bribery or corrupt practices is making companies more vulnerable, especially since they are under pressure to expand their business and operate in high-risk markets.
“The risks of fraud, bribery and corruption are not going away. Businesses remain under intense pressure to grow and that growth can be achieved while appropriately managing the risks of fraud and corruption,” said Michael Adlem, Mena leader of EY’s Fraud Investigation and Dispute Services practice.
Corruption or bribery, even if it helps bring money into the company, is not good for business. Once publicized, the illegal practices of an organisation or its employee can damage the reputation of the business and cost the company a lot of money.
There have been a number of high-profile bribery and corruption cases implicating top executives of major corporations, and many of these have attracted huge fines and jail terms.
Bribery has been practiced by many companies around the world in order to enjoy preferential treatment or tax favours, and secure public procurement contracts and customs clearance.
According to a study by the Organization for Economic Cooperation and Development (OECD), companies pay bribes especially if they are in the construction, transportation and storage and information and communication industries.
Bribes are usually paid by large companies, often with the knowledge of senior management.
In many cases, companies spend an average of $13.8 million per bribe or equivalent to 10.9 per cent of the total transaction value and 34.5 per cent of the profits.
According to Adlem, changing the “culture of compliance” can take time, especially if businesses have become accustomed to operating in grey areas. “Increased regulation and scrutiny will help speed up this focus but there is still pressure to keep improving,” Adlem said.
“Senior management need to continually assess the risks their businesses may be exposed to. These risks can be external, like cyber-attacks or money laundering, but also internal, including market manipulation or misreporting.”
