Anti-Bribery and Corruption: Rising to the challenge in the age of globalization
Globalization has entered a new phase, posing greater challenges for anti-bribery and corruption (ABC) compliance than before. Two trends are driving these changes. First, a growing number of governments around the world are tightening ABC regulations or introducing new ones. Second, as companies globalize their operations, they rely more heavily on third parties than before to do business in far-flung parts of the world, often in areas where there is high risk of corruption.

Regionally, international companies operating in ASEAN cite the failings in the fair and efficient enforcement of the law and pressure to bribe officials and/or customers for approvals and contracts as the greatest risks to their long-term business operations in ASEAN.

This report analyzes some of the key risks companies face when dealing with bribery and corruption. It examines some of the ways in which they are dealing with them and what needs to be done to meet the challenge. This survey of companies around the world shows that companies are attempting to rise to the challenge but a great deal more needs to be done to create a sturdy ABC compliance structure.

The main findings of the survey include:

  • Half of respondents from the Asia Pacific region say they are “highly” or “moderately challenged” by ABC issues, with a similar proportion among them finding developing effective mechanisms for training and communicating ABC issues challenging.

  • With companies further globalising their operations, third party management poses the greatest challenge for their ABC programmes, with auditing third parties for compliance the biggest single concern and conducting due diligence on third parties being the third biggest.

  • Despite the difficulty of monitoring dealings with third parties, nearly half of respondents do not identify third parties that are high-risk. Among the respondents from the Asia Pacific region, only 40 percent had a formal process for identifying high ABC risk third-parties. More than half of respondents with right-to-audit clauses over third parties have never exercised these rights.

  • While expansion through mergers and acquisitions is a key part of the growth strategy of two-thirds of respondents, many global companies are unaware of the potential financial and regulatory consequences of failing to identify corruption risks during acquisitions. Among Asia Pacific respondents, 65 percent are unaware of “successor liability” issues arising from the Foreign Corrupt Practices Act and only 34 percent among them include ABC considerations in their pre-acquisition due diligence process.

  • Respondents complain their organisations do not provide them with the resources to manage corruption risk, fourth among the top challenges facing all survey respondents.

  • Data analytics is an important and cost-effective tool to identify bribery and assess ABC controls. Yet only a quarter of Asia Pacific respondents use data analysis to identify violations and only one-tenth of those who do so monitor data on an ongoing basis.
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