TORONTO (miningweekly.com) – One in five Canadian executives believe that bribery and corrupt practices take place widely in the country, advisory firm EY’s latest Global Fraud Survey has found.
“That's disturbingly high,” EY partner and Canadian fraud investigation and dispute services leader Mike Savage said.
He noted that corruption interfered with fair competition for business and, to overcome that, companies needed to create a culture where ethical behaviour was at the core of their operations – not just at home in Canada, but also at their overseas operations.
“They also need to encourage people to speak up if they think something isn't right,” Savage said.
The survey found that while 74% of Canadian organisations had whistleblowing hotlines in place, this number was still much lower than countries such as the US (96%) and the UK (82%).
The head of corruption risk management at Canadian risk mitigation firm CKR Global Margaret Wilkinson recently told Mining Weekly Online that the resource extraction industry as a whole was at an extreme risk to bribery and corruption of officials, especially owing to the often isolated and foreign underdeveloped locations of the companies’ projects.
She encouraged companies to implement proactive prevention policies to combat corruption.
However, Savage said the recent increased public enforcement action by Canadian authorities, such as the Royal Canadian Mounted Police, appeared to have raised awareness of bribery and corruption in Canada.
Last month the first offender under Canada’s Corruption of Foreign Public Officials Act was sentenced to three years imprisonment, a stark warning to Canadian extraction companies to take proactive steps to ensure their compliance with anticorruption and bribery rules to avoid finding themselves in hot water.
“A full 90% of Canadian respondents said there are clear penalties for breaking the antibribery/anticorruption policies. That's up from 78% two years ago and higher than the global average of 73%,” Savage said.
"Organisations need to set the tone from the top that fraud and corruption are serious issues that won't be tolerated. Boards should be demanding that their organisations go beyond the basic building blocks. Without a company culture that demands transparency to reduce fraud and help prevent cybercrime, companies are putting their entire business on the line,” Savage said.
Meanwhile, the survey found that 30% of Canadian organisations saw cybercrime as a significant risk, while about 60% of the respondents said the threat of hackers concerned them.
"The number of Canadian organisations that think cybercrime is a significant risk is unexpectedly low. In reality, the risk is real – and it's growing,” Savage noted.
While the pressure on companies for timely disclosure of breaches is rising in many jurisdictions, EY's survey found 74% of businesses globally did not disclose a public breach of security.
"High-profile cybercrime incidents are making headlines on a regular basis. Companies need to have a robust incident response strategy in place, or risk significant reputational and financial damage. They can't afford to 'play it by ear' when an incident arises,” Savage cautioned.
EY recommended strategies to help reduce the rate of fraud in organisations to improve standards of business conduct and help keep companies out of trouble.
These included board engagement to appropriately challenge management and request regular updates regarding fraud, bribery and corruption risk assessments; mining big data by using forensic data analytics tools to improve compliance and investigation outcomes and to help management provide useful summary information to the board; and performing anticorruption due diligence as the norm and not the exception.
Organisations should also provide clearly defined escalation procedures, whether to respond to a whistleblower or a cyber incident, to reduce the damage being done; implement tailored training programmes, while business unit leaders should be evaluated on participation levels and C-suite executives need to lead from the front; and provide budget support for internal audit and compliance functions.