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What to trust most in the fight against fraud and corruption

Between November 2016 and January 2017, 4,100 interviews were conducted in 41 countries across EMEIA (Europe Middle East, India and Africa) by Ipsos MORI on behalf of EY. 100 respondents from different sectors of the Cyprus economy participated for the first time in the survey.The results of the survey suggest that although progress is being made in the fight against bribery and corruption, an average of 51% of the employees interviewed in EMEIA assume that business transactions in their country involve bribery and corruption. An issue of major concern is that 82% of the survey participants from Cyprus believe that bribery/corrupt practices happen widely in business locally. In fact, Cyprus along with Ukraine and Greece occupy the top three positions of the said list.

Across EMEIA, our survey has found that 77% of board directors and senior managers could justify unethical behaviour to help a business survive, while 1 in 5 would deliberately misstate a company’s financial performance. These respondents are also more prepared to act unethically to improve their remuneration than their colleagues.

When it comes to ethical choices, the results are somewhat mixed for Cyprus. Participants indicated that they are prepared to resort to unfair means for the supposed well-being of their respective companies but not to benefit their own career. Specifically, compared to the average of 17%, 37% of the Cypriot participants indicated that a decision to offer cash payments to win or retain business can be justified in order to help their business survive. On the other hand, only 10% of those interviewed said that they would act unethically to support their own professional progression and to receive a higher salary compared to the average of 21%.

Efforts by regulatory authorities are also hitting home, with half of the survey participants indicating that regulatory activity has had a positive impact in ethical standards within their companies.82% of those interviewed agree that prosecuting individuals would help deter fraud, bribery and corruption by executives.

According to Stavros Pantzaris, EY Cyprus Country Managing Partner, “The harsh measures imposed by the courts on those convicted in relation to the recent highly-publicised scandals,offer a very clear message to the business community that unethical behaviours will no longer be tolerated and anyone who is contemplating engaging into unethical practices should think twice”.

The results of our EMEIA survey indicate that relaxed attitudes toward unethical behaviour and high levels of mistrust among colleagues are common characteristics of today’s workforce of young professionals.In particular, young professionals (25-34 year olds) are more likely than any other age group to justify unethical behaviour to help a business survive, to meet financial targets and for their own career progression. Besides greater willingness to offer bribes, the young generation is also less trusting of colleagues. More than all the other age groups, they believe more strongly that they would act unethically in order to climb up the career ladder more quickly or to earn more money.

Aristodemos Yiannakas, Senior Manager in the Fraud Investigation & Disputes Services, commented, “The survey results are indeed worrying. This generation of young professionals constitutes the future of our businesses. If companies do not take action now to combat unethical conduct across all levels of their organizations, such behaviours may increase in the future. Companies need to introduce programmes so as to educate and motivate all their employees to act in an ethical way”.

An organisation’s critical digital and physical assets are at greater risk of theft, damage and manipulation by insiders than ever before. Threats posed by insiders are difficult to detect without gathering and analysing data from a variety of sources.Despite the need to collect such data, our survey identified a tension between opinions about what data companies should monitor and the types of surveillance that their employees consider a violation of privacy. 67%of our respondents in Cyprus say their companies should monitor data sources such as emails, telephone calls, social media profiles or messaging services, and yet, 86% of respondents would consider monitoring these data sources as a violation of their privacy.

Our survey has identified some important findings relating to whistleblowing. Specifically, only 10% of the Cypriot respondents actually had information or concerns about misconduct and went ahead and reported it. The majority (66%) of those surveyed never had such information. The three main factors likely to prevent employees from reporting an incident of fraud, bribery or corruption within their business are: (1) the concern about their future career progression within the firm, (2) the fear for their personal safety, and (3) loyalty to their colleagues. The significant majority of those who would report information or concerns about misconduct to a third party said they would go directly to a law enforcement agency or regulator.

Companies continue to face the threat of cyber-attacks by various actors, as we have all witnessed in recent weeks. When they occur, such breaches can have a highly disruptive impact on a company’s operations potentially resulting in higher operating costs, the loss of intellectual property and the leak of confidential information. To tackle this threat, 79% of the respondents from Cyprus indicated that their company should have in place a robust cyber breach response plan. Positively enough, 57% indicated that, in fact, their company has a robust cyber breach response plan compared to 37% at EMEIA level.
Leaders who adopt this parallel approach will best position their businesses against fraud and corruption.

Dr.Aristodemos Yiannakas, PhD, CFE
Senior Manager
EY Cyprus Fraud Investigation & Dispute Services (FIDS)

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