Compliance officials across the region may have congratulated themselves on tightening controls and closing loopholes in response to the global financial crisis. But the results of a recent study, which deliberately sought feedback from mid- to junior-level employees rather than top-rank executives, suggest that there is still plenty of work to be done. Findings of the latest EY Asia-Pacific survey entitled “Fraud and corruption — driving away talent?” indicate significant concerns about illicit activities in the region.
However, the study also revealed a positive new trend. It appears that, even if they are hesitant to become whistleblowers, staff are increasingly prepared to make a stand by taking their talents elsewhere.
“This should be a wake-up call for businesses in a region where the labour market is highly competitive and it is already difficult to recruit and retain staff,” says Chris Fordham, managing partner of EY’s Asia-Pacific fraud investigation and dispute services (FIDS) practice. “Where necessary, companies should take steps to address the issue comprehensively by showing strong ethical leadership and having a cohesive fraud prevention framework with up-to-date and well enforced internal controls, policies and procedures.”
The survey heard from more than 1,500 respondents working for “large” companies in 14 countries and territories in Asia-Pacific. A company was considered as “large” if it had anything from 100 to over 1,000 employees.
The study’s findings made it clear that fraud prevention is no longer just a legal and compliance issue. Failing to take appropriate action or turning a blind eye to crimes and misdemeanours — whatever the scale — will have a direct impact on recruitment and retention.
Two out of three respondents said their colleagues were aware of fraudulent activities taking place. A quarter said that they have co-workers who do not comply with their organisation’s code of conduct. And 40 per cent had witnessed instances in which the employer took no action against individuals that were known to have breached anti-bribery and anti-corruption policies.
In contrast, the survey found that 93 per cent of employees in Hong Kong say they are not willing to work for unethical companies, while 86 per cent of all respondents under 25 indicated they would be unwilling to work for an employer known to have been involved in bribery or corruption.
Fordham notes that, since the last such survey in 2013, more organisations have established in-house codes of conduct, spelt out anti-bribery and anti-corruption (ABAC) policies, initiated relevant training, and set up hotlines for whistleblowers.
“These measures are steps in the right direction, but are still not as effective as they should be,” Fordham says. “Companies need to demonstrate and communicate about the importance of ethical behaviour if they want to effect real change.”
For example, there has been a noticeable drop — from 81 per cent in 2013 to 53 per cent this year — in the number of people prepared to use whistleblower hotlines. According to survey respondents, this is due to increasing concerns about callers having insufficient legal protection and a presumed lack of confidentiality.
This highlights the fact that superficial policies often miss the mark. If management and C-suite executives are out of touch with what is happening — or not happening — in-house, then they shouldn’t be surprised if employees consider other options.
“There is a change in perceptions of how fraud and corruption is affecting businesses,” Fordham says. “Until now, incentives for getting compliance right have centred largely on minimising financial loss and reducing reputational damage. But the potential impact of fraud on an organisation is much broader than ever before. Failure to address the employee angle can affect productivity and growth strategies and, quite clearly, cause companies to lose talent at every level.”
This article appeared in the Classified Post print edition as Fraud and corruption can drive away talent.
