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Company rules against fraud and bribery ignored

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18th May 2015
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Large companies are improving rules against fraud and corruption but often don't use them, research by Ernst & Young suggests.

Regulations against fraud and corruption have increased and toughened since the financial crisis of 2008. A survey of 3,800 employees of large businesses in 38 countries by the Big Four firm showed that the majority of  companies have been successful in implementing rules against meet fraud and bribery (include training for staff, whistleblowing hotlines and codes of conduct) there is still room for improvement.

Around 60% of those surveyed in the UK said their company has an anti-bribery or anti-corruption policy and code of conduct but only 25% said they had seen their company take action against employees for breaching them.

In total 79% of respondents said their company had a whistleblowing hotline. But only 28% said management always followed up on whistleblower reports, the EY research found.

John Smart, head of EY’s fraud investigations and disputes team, said although progress had been made in the UK tackling fraud and corruption, high-profile scandals, such as libor and FX rigging, had "thrust corporate ethics into the spotlight" and highlighted the need to encourage the right behaviour and values from the boardroom to the office floor.

“Policies are just one lever among many for managing fraud, bribery and corruption risks," he said. "Changing culture and behaviour is a difficult and long-term process.”

Some experts have said there's room for improvement in the Big Four firms' ethics. MPs and campaign groups have criticised large accounting firms for helping companies avoid tax by funneling profits between subsidiaries and from high-tax to low-tax countries in complex arrangements that are legal but ethically contentious.

The ICAEW, and other accounting bodies, has an ethical code for tax advice for its members.

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By jvenegas16
18th May 2015 15:18

And beyond

Let's go one step further and consider fraud and corruption committed by financial institutions against companies, and the cases of bribery which are not disclosed but continue to happen despite of 5 years (4 years since it came to force) of the UK Bribery Act 2010.

Certainly there are many unresolved issues in companies driven by profits and thriving to show profits in difficult times.

There is no doubt that it is a Big RED FLAG that in the middle of a 'financial crisis' only private companies have seen the collapse or have gone into administration, however no financial institution has been affected, leaving some bailed out cases at one side. Other financial institutions have been presenting profits during that period, especially when investment banking became unprofitable and started to be disregarded by the major banks. And on top of that the scandals don't stop: money laundering, manipulation of LIBOR, dark pool, etc.

I believe it is the culture of the amoral business and a reflection of the differential association.

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