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International Business Attitudes to Corruption - A Middle East perspective

  • Corruption, Fraud and Regulatory Investigations
Anita Barker

Anita Barker

Middle East Risk Watch - Issue 7 - July 2017
International Business Attitudes to Corruption - A Middle East perspective


Control Risks published its 2017 International Business Attitudes to Corruption survey, which included responses from 1,000 compliance professionals worldwide, across multiple industries ‒ from manufacturing and oil and gas to financial services and life sciences. Respondents were asked a series of questions covering a broad range of global compliance issues, including anti-corruption, anti-money-laundering, anti-trust, privacy and data protection. 

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The key findings from the survey were as follows:
  • Large companies’ compliance functions are under-resourced: A quarter of large companies invest less than $25 per staff member annually on compliance; 28% of large companies have compliance teams of five people or less.
  • Compliance needs to involve senior management: Only 27% of executives responsible for compliance attend all board meetings.
  • There is an untapped opportunity for compliance officers to use technology to increase efficiency.
  • Compliance officers need to be more proactive: two thirds of them rely on whistleblowing rather than taking the initiative to conduct anti-fraud and anti-corruption audits.
  • Compliance policies are inconsistent across companies’ global operations, with some local exceptions.

So how does the Middle East stack up?

Compliance spend/investment

When it comes to compliance budgets, large companies (those with 10,000+ employees) in the Middle East are investing more than their counterparts on annual compliance; only 4% stated that they have a compliance budget of less than $250k a year.  Although respondents were not specifically asked to explain their budgets, the higher rate of compliance investment suggests an acknowledgement that the region requires significant attention from companies and their compliance teams in addressing corruption risks and educating their employees.

Where does responsibility lie?

In the Middle East, 27% of executives responsible for compliance attend all board meetings. In contrast to the rest of the world, where 44% of companies have a compliance officer solely dedicated to compliance matters, in the Middle East this figure is only 31%. In the region, 36% of General Counsels assume responsibility for compliance (compared with 29% globally). This is a trend we have seen with our own clients, as the region catches up with the rest of the world in recognising the need for a full-time compliance officer.

The use of technology

According to the survey’s respondents, the Middle East is behind the global average in the use of technology to:  

  • Proactively monitor compliance (44% vs 53%)
  • Implement anti-money laundering procedures (24% vs 34%)
  • Oversee third party management (16% vs 31%).


Compliance teams, especially those with limited resources, need to make the best possible use of technology and data analytics to support they company’s compliance programme and provide critical business insights into trends and high-risk areas.

Reporting

It is encouraging to see that 58% of Middle East-based respondents have anonymous whistleblower lines or other reporting mechanisms in place to report compliance issues. But what about the other 42%? What mechanisms do they use? 28% have a known person or team within the organisation responsible for responding to improper conduct. The remaining respondents take a more proactive approach, employing data analytics and technology to monitor transactions, conducting surprise audits and anti-corruption reviews. These are in the minority, however. Compliance officers can’t afford to sit on their hands waiting for things to happen.

When it comes to compliance, there is a lot at stake. Companies globally are continuing to fall foul of the law and enforcement agencies by not having adequate procedures in place, not training their employees and not monitoring or addressing changes to the corruption landscape. The reputational impact of non-compliance, not to mention the associated financial cost, can be catastrophic for a company and would take years to recover from, if recovery is possible.

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