Directors in Europe, Middle East, India & Africa Largely Justify Fraud

EY report finds the perception of corruption is widespread

By Eve Tahmincioglu

Fraud in the business sector across Europe, the Middle East, India and Africa (EMEIA) is still seen as a major problem throughout the region with a majority of directors and senior executives saying they could justify corruption.

EY’s biennial EMEIZ Fraud Survey, which surveyed 4,100 employees from large businesses in 41 countries, found that 51% of respondents still perceive the bribery and corruption to be a widespread problem in each individual country.

Other findings include:

  • 77% of board members or senior managers say they could justify unethical behavior to help a business survive
  • Only 21% of respondents are aware their company has a whistleblowing hotline

“There is worrying evidence of a lack of leadership from senior executives to tackle these issues, which may be negatively influencing the younger generation workforce,” said Jim McCurry, EY EMEIA Fraud Investigation & Dispute Services Leader, in a statement.
“Companies,” he continued, “need to take steps to create a culture in which it is in employees’ interests to do the right thing. Training and awareness programs can play a big role in helping individuals understand the consequences of fraud and corruption, and encourage them to come forward if they have concerns over unethical conduct.”

There are differences depending on the generation.

The study found:

  • The Generation Y cohort (25 to 34 year olds), who constitute 32% of respondents, demonstrate more relaxed attitudes toward unethical behavior the survey finds. Seventy-three percent state that such behavior is justified to help a business survive, compared with 49% of 45 to 54 year olds (Generation X) surveyed who hold this view.
  • And 68% of Generation Y respondents believe their management would engage in unethical behavior to help a business survive, and 25% of this age group would offer cash payments to win or retain business.
  • Generation Y also shows a heightened distrust of their co-workers, with 49% believing that their colleagues would be prepared to act unethically to improve their own career progression, compared with 40% across all age groups.

The countries ranked the highest when it comes to perceived widespread business corruption are Ukraine, Cyprus, Greece, Slovakia, Croatia, Kenya, South Africa, Hungary, India, and Egypt. With the lowest fraud ranking are Denmark, Norway, Finland, Switzerland, Sweden, Oman, Netherlands, UK, UAE, and France.

“For many companies, limited progress appears to have been made in providing an effective mechanism for highlighting wrongdoing,” McCurry explained. “Employees are either unaware of the correct channels, or more worryingly, feel pressured to withhold information, which shows a lack of leadership from senior management to tackle the issue.”

He advised that leadership should “invest in effective whistleblowing channels and communicate appropriate processes to help ensure employees who witness wrongdoing know where to go.”