From left: Ernst & Young's Manager of Accounts and Business Development Mohammed Alariefy, Criminologist and Director of Perpetuity Research and Consultancy International (PRCI) Martin Gill, Ernst & Young's Head of Fraud Investigation and Dispute Services Robert Chandler, Partner in Ernst & Young's regional Fraud Investigation and Dispute Services Michael Adlem and Ernst & Young's Associate Director for Accounts and Business Development Al-Hasan M. Al-Shaibani.By Roberta Fedele Saudi Gazette JEDDAH – Despite the financial crisis and collapse of some multinational companies over despicable business practices, senior executives show propensity to pay bribes to win business, Ernst & Young said in its 12th Global Fraud Survey. Of the nearly 400 CFO's polled from November to February, 15 percent would make cash payments to win or retain business - up from 9 percent two years ago. More than 1,700 executives - including CFO's and leaders in legal, compliance and internal auditors - across 43 countries were polled for their views on corruption. Over a third of the respondents believe corruption occurs frequently in their country. Bribery or corrupt practices are believed to be even bigger in rapid-growth markets, survey respondents said. Financial statement fraud remains a risk as well, with 5 percent of the respondents saying they are willing to misstate financial performance, up from 3 percent in the last survey. Against this backdrop, and in a fight against bribery and corruption, Ernst & Young Middle East held a seminar Sunday at Elaf Hotel in Jeddah to discuss the latest findings of the first Earnst & Young Middle East Fraud, Bribery and Corruption Survey. The regional survey was carried out by Director of Perpetuity Research and Consultancy International (PRCI) Martin Gill and PRCI Research Associate Janice Goldstraw-White, two well-known criminologists who have published a variety of papers and books on crime and had the chance to interview several convicted criminals and crime victims. The regional survey was carried out by Director of Perpetuity Research and Consultancy International (PRCI) Martin Gill and PRCI Research Associate Janice Goldstraw-White, two well-known criminologists who have published a variety of papers and books on crime and had the chance to interview several convicted criminals and crime victims. Professor Gill took part to the seminar with Partner in Ernst & Young's regional Fraud Investigation and Dispute Services Michael Adlem and Ernst & Young's Head of Fraud Investigation and Dispute Services Robert Chandler. The purpose was to shade light on the increasing sophistication of fraud in the Middle East, corporate managements' difficulty to tackle the issue and companies' urgent need to fully embrace anti-corruption initiatives and replace traditional practices with international ones to succeed in the local and international marketplace. "The economic downturn and straitened liquidity flows have revealed many ongoing frauds in the Middle East (mainly caused by greed, ease of opportunity and personal debts) that were previously difficult to be detected. This situation emphasizes the challenges facing decision makers that can no longer wait for corruption to occur before taking action," said Gill. Gill's research addressed 139 individuals from 64 organizations in 8 Middle East countries and revealed an ingrained cultural perception of corruption as acceptable and beneficial to business. According to the survey, illegal practices are not only widespread and tolerated but also becoming increasingly sophisticated thanks to online frauds and counterfeit scams. Organizational failure and skepticism are prevalent. Fifty-two percent of respondents admitted that their companies did not have a relevant anti-fraud strategy, 35 percent confessed that no policy was in place for reporting forms of corruption, more than one fifth said it was not possible to conduct business competitively in the Middle East without committing fraud and half said legislation would not prevent corruption occurring. "Corruption is viewed as easy and unlikely to be detected. In addition, admitting to be victim of fraud can cause a reputational damage and companies often prefer to deal with it secretively and avoid taking formal external action," Gill said. "Despite a number of large companies are asking their suppliers to operate robust ethics procedures and boards of many organizations are committed to combating fraud, the problem is still underestimated," he noted. The seminar was also enriched by Chandler's presentation of the biennial Ernst & Young Global Fraud Survey and Adlem's description of the impact that American and English legislation have on the Middle East. "The US Foreign and Corrupt Practices Act (1977) and the UK Bribery Act (2010) have extra-territorial reach and oblige Middle East companies with UK or US operations to hurriedly review existing anti-corruption procedures, both internally and for associates," Adlem said. "Increasing pressure over Middle East's organizations does not only derive from America and Europe. As concerns Saudi Arabia for instance, lot of discussions are taking place at a governmental level and big Saudi companies are stopping suppliers lacking international policies and procedures," he added. __
