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Corruption in companies and the gray area of ​​gifts, gratuities and cash payments

An Ernst & Young survey on how corruption is perceived in companies and the importance of regulating the gray area of ​​gifts, entertainment, freebies and cash payments to prevent bribery

Corruption in companies and the gray area of ​​gifts, gratuities and cash payments

If we were to ask any company manager, in front of an audience of journalists, if it is true that corruption is bad for the system, the answer will almost certainly be affirmative. However, if the question were made anonymously, would we have the same answer? Also would it be the same for all company executives?

To answer this question, in 2015 Ernst & Young (EY) carried out around 3800 anonymous online interviews (of which 100 in Italy) with large companies in 38 different countries. The companies that responded to the survey were divided between those created in the last two years (936) and companies existing and operating for more than two years (2802).

This breakdown shows that 25% of the sample made up of companies set up in the two years prior to the survey believe that offering gifts to third parties can be justified if it helps a company to survive; this percentage, in companies created and operational for over 2 years, drops by eight points, reaching 17%.

The survey also shows that there is a difference in judging the offer of cash payments to third parties. In "young" companies, 25% of subjects justify the aforementioned payments if they help the company to survive, while in "less young" companies that have been operating for more than two years, cash payments aimed at business growth are only considered by 15% % of the same.

The offer of any type of entertainment (for example dinners or other) by companies to third parties follows the same trend: it is justified by company managers in 22% of young companies and by 15% of those operating for more than 2 years.

These results show how these ambiguous practices are more accepted by young companies, which presumably have yet to enter the competitive arena effectively, and less justified by well-established companies which have, on average, overseen major market segments.

Cash payments, entertainment offers and gifts fit into the so-called "grey area". It includes everything that, not always being objectively well definable, can be understood from time to time depending on the circumstances and a subjective view, as licit or illicit.

As foreseen by documents issued by authoritative international organizations (OECD), the practices falling within the "grey area" should be promptly governed by internal company regulations to prevent them from constituting actual episodes of corruption. If it is true, in fact, that in the short term corruption could lead to increases in revenues, in the medium-long term it can lead to important negative effects on business continuity due to reputational damage and fines.

In the survey revived by EY in 2016, in which 2825 companies from all over the world participated, the division between recently and less recently established companies was not made, but the entities were simply asked which of the previously mentioned practices can be justified if the help to survive an economic recession: the significant figure that emerged was based on the percentage of 24% that companies cited as "entertainment offers" but, even more, on the 36% of the sample that identified more than one practice among offers entertainment, gifts and cash payments.

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