Ernst & Young study: Romanian businesses could be in denial over presence of corruption in their own organizations

A new report on fraud and corruption from consultancy firm Ernst & Young renders thought provoking results for Romania. Although there is a widespread belief that corruption can be found in Romania’s business community, the level of perceived corruption is lower than the Eastern European averages. But according to Ernst & Young “Romanian respondents appear to be in denial about how close bribery and corruption are to home.”

The study found that 61 percent of Romanian respondents believe that bribery and corruption are widespread in business in Romania compared to the 74 percent Eastern European average. However, only 17 percent of respondents think that companies regularly exaggerate their financial reports to appear more positive, while just 1 percent admit that their own company misreports financial statements.

Ernst & Young interprets the views on the prevalence and corruption in general in Romania as denial, or a head in the sand attitude, rather than evidence of an improving situation. Only 19 percent of Romanian respondents think that bribery to win contracts is common practice in their own particular sector. This, according to Ernst & Young, is yet more denial, with the study arguing that if bribery exists in one sector, more than likely it does in more.

“In reality, however, it is more likely to be that if bribery and corruption is happening in each country, it is happening in all sectors, then, it may be well happening in your business,” said Ernst & Young Romania Fraud Investigation & Dispute Services Leader Kenan Burcin Atakan.

The tendency to consider corruption, fraud and bribery as commonplace in the country but not in the respondent’s sector can only be addressed by a change in management policy. Ernst & Young suggests that companies and their management teams need to recognize the possibility that corruption could exist within their own business and not just out there somewhere in the general business world. “In order to mitigate the risks of fraud, bribery and corruption, management must acknowledge that their company, and not just the local market, is susceptible to such risks. Accepting that these risks exist is the first step to creating and implementing an effective program of fraud deterrence,” said Kenan Burcin Atakan.

When it comes to tackling bribery/corruption/fraud problems, the Ernst & Young study found plenty of anti-bribery/anti-corruption (ABAC) policies, but only 13 percent of respondents believe that their own company’s ABAC policy is “flexible” enough to tackle the specific, local demands of the business or area. As well as a lack of flexibility, respondents displayed skepticism in the ABAC policy frameworks to report and tackle incidents and support whistle-blowers that come forward. “Less than half of the employees surveyed believe that their company would support people who reported cases of suspected fraud, bribery or corruption, and only 36 percent indicated that reporting such instances is facilitated by a whistle-blowing hotline.”

According to Ernst & Young’s Kenan Burcin Atakan, companies fail to realize that effective in-house measures to tackle bribery/corruption/fraud issues are more cost effective than “after the fact” investigations. As to what constitutes a good approach to preventing corruption, Atakan concluded that “anti-bribery programs must be properly implemented through constant communication, training and monitoring, as well as a strong message of support disseminated from the top of the organization.”

Between November and December 2012, tthe global market research agency Ipsos conducted 3,459 interviews by telephone, online or in person with employees of large companies across 36 countries in Europe, the Middle East, India and Africa for Ernst & Young to gauge views on fraud, bribery and corruption. Eastern European results are based on 1,256 interviews across 12 countries, of which 100 interviews were conducted in Romania.

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