Survey Says ...

KPMG Forensic recently released (here) its 2011 "Global Anti-Bribery and Corruption Survey." KPMG "surveyed 214 executives in the U.S. and U.K. to identify their most vexing anti-bribery and corruption ("AB&C") compliance challenges and to understand how companies are preventing, detecting and responding to AB&C risk." In summary form, the KPMG survey found that "despite a greater awareness of the business and legal imperatives for well-developed AB&C compliance programs among survey respondents, many compliance programs lack sufficient depth and breadth to effectively mitigate AB&C risk around the world."

According to the survey, "the three most significant AB&C compliance challenges cited by both U.S. and U.K. respondents are auditing third parties for compliance, difficulty in performing effective due diligence on foreign agents/third parties, and variations in country requirements and local laws on issues such as data privacy and facilitating payments."

Some survey results that caught my eye.

Nearly 60% of survey respondents said it was "not at all challenging" to "continue to run business while managing investigations."

Even though third-party (agent, distributor, joint venture partner, etc) risk ranked high in the survey results, only approximately 60% of respondents actually distribute AB&C policies and procedures to third parties and 60% of respondents said that most third party agents are not required to take AB&C training (in 2008 the U.S. response was 93%). Of further interest regarding third-parties, nearly 60% of respondents have "right to audit" clauses in contracts with third parties, but approximately 65% of respondents indicated that they have not exercised their "right to audit."

Even though facilitating payments are exempted under the FCPA (they are not under the U.K. Bribery Act or the OECD Convention) only 13% of U.S. respondents allow such payments (in 2008, 24% of U.S. respondents said they allowed such payments).

"More than 70% or respondents (73% in the U.K. and 70% in the U.S.) agreed there are places in the world where business cannot be done without engaging in bribery and corruption."

"To mitigate the risk of doing business in countries in which bribery and corruption is perceived to be endemic, respondents' favored strategy was to provide additional training (43% of UK and 49% of US respondents), with enhanced internal controls, more closely monitoring operations, conducting due diligence on third parties, and obtaining compliance certifications all following closely."

"An additional risk mitigation strategy - selected by 32% of U.K. and 25% of U.S. respondents - was to not do business in certain countries." The survey results do not breakdown this response in any detail, but it would be interesting to know which countries the 25% of U.S. respondents were not willing to do business in because of corruption concerns. My guess is that these countries are not high-growth, high-potential markets.

The KPMG survey was conducted via telephone between October-November 2010 and included 214 executives (106 in the U.S., 108 in the U.K.) who identified themselves as "one of the most senior persons in charge of day-to-day AB&C matters at their company."

KPMG Forensic assists "clients in achieving the highest levels of business integrity through the prevention, detection, and investigation of fraud and misconduct ...".