Some recent FCPA-related surveys and notable survey results to share.
Ernst & Young recently released its 12th Global Fraud Survey. The survey was based on “more than 1,700 interviews … conducted in 43 countries between November 2011 and February 2012. Survey results included the following:
39% of respondents reported that “bribery or corrupt practices occur frequently in their countries”
The following question was asked: “what, if any, of the following do you feel can be justified if they help a business survive an economic downturn.” 30% agreed with “entertainment to win/retain business”; 16% agreed with “personal gifts to win/retain business” and 15% agreed with “cash payments to win/retain business.”
“15% of CFOs surveyed would be willing to make cash payments to win or retain business”
“Only 46% of CFO respondents had attended [anti-bribery/anti-corruption] training”
“16% of CFO respondents do not know that their company can be held liable for the actions of third-party agents.”
McGladrey (a company that provides assurance, tax and consulting services focused on the middle market), in partnership with The Institute of Internal Auditors Research Foundation, recently released this “Global Corruption Law Compliance Report.” The report was based on a survey of 120 executive leaders at middle-market companies across the globe. Participants were asked a variety of bribery and corruption related questions. Survey results included the following.
52% of survey respondents reported dealing with more than 100 foreign business partners on annual basis. 53% of companies with $1 billion or more in annual revenue reported having 50o or more foreign business relationships.
“Only 30% of all survey respondents say their companies always conduct a risk review of existing business relationships and ties to agents in foreign countries.”
“Just 43% of respondents say their companies conduct training at least once a year.” “Slightly more than one-third of all companies in our survey say they offer no compliance training, with the vast majority of those businesses in the under $500 million annual revenue bracket. Still, 24% of companies with over $1 billion in annual revenue also say they don’t provide corruption law compliance training.”
The question was asked, “in the past two years, has your organization experienced one of the following events due to a global corruption related incident. “Dismissal of an employee” – 24% said yes; “potential contract, deal or acquisition restructured” – 10% said yes; “potential contract, deal or acquisition cancelled” – 12% said yes.
“75% of all companies agree that their corruption law-related internal controls need some level of improvement”
As noted in this previous post concerning the November 2012 FCPA Guidance, the DOJ and SEC recognized in the Guidance that “positive incentives” can drive compliant behavior. However, much of this recent data is consistent with prior data – and all point in the same direction: despite the general increase in FCPA enforcement and despite the incentives currently in place, a meaningful percentage of business organizations are not doing what the enforcement agencies want them to do. The enforcement agencies current incentive – that such compliance policies and procedures can only lessen the impact of legal exposure – is not the right positive incentive. An FCPA compliance defense (see here) is.
Of course, we don’t know what any of the above percentages would be if there was a compliance defense. However, I am confident that many categories would be “better” if there was an FCPA compliance defense. “Better” numbers would mean better compliance, which would likely mean less instances of improper conduct, which would likely mean less bribery, which would mean the objectives of the FCPA are being better achieved.
This recent Grant Thorton survey of in-house counsel found that “‘regulatory compliance and enforcement’ was considered the second-highest threat to growth – even more threatening than traditional business concerns such as ‘global or domestic competition’ and the ‘lack of customer demand.'” Behind labor law violations, the FCPA was listed as the second most “specific regulatory area” respondents saw as a threat.
The survey was conducted online between January 15, 2013, and March 1, 2013. There were 243 respondents, all of whom were in-house counsel, 44% of whom were general counsel. The respondents were split evenly from among publicly traded and privately held companies,