Corruption and what you can do about it

Published | Tuesday, May 7th, 2019

If the countless investigative inquiries and commissions in South Africa recently have revealed anything, it is that bribery and corruption have been the order of many years locally. What has also been evident is that companies are as susceptible to corrupt activities as government entities. Bribery and corruption lead to embarrassing newspaper headlines, reputational damage, loss of investor confidence and the ultimate demise of an organisation with honest employees as collateral damage.

The ACFE 2018 Report to the Nations Global study on Occupational Fraud and Abuse states that 38% of all cases surveyed in this study are as a result of corrupt activities.

Based on these stats it is vital that all organisations put measures in place to combat these types of activities.

Organisation culture and tone at the top

The leaders within an organisation have a duty to set certain values and behaviours that will drive how all employees interact with each other, customers, suppliers and the rest of the ecosystem within which they operate. It is also vitally important that the leaders themselves demonstrate these values and behaviours and set an example. Corruption in most of the recent reported instances have been brought to light because of employees within that organisation speaking up. If you would want to create a culture where people are comfortable speaking up, it’s important to have a whistle-blower policy in place could assist with this type of reporting.

Sound internal control environment

A well-structured internal control environment provides employees with a backdrop to implement policies, procedures, laws and regulations effectively and efficiently. The culture of the organisation dictates how the internal control environment is adopted and initiated, but having these processes in place allows for transparency and accountability by all employees.

Proactive business monitoring

Whilst many organisations regard their business as unique, many of the underlying, operational processes are similar and as such experience the same risks. Skill or time constraints mean that few of these organisations are able to check all of the data that they produce each day. With the assistance of data analytics, it is possible to scrutinise critical business processes for abnormalities.

Management oversight

This begins at board level, where the executives of a company are responsible for setting the strategic business objectives. These are then filtered down to senior management who develop oversight controls to ensure that the objectives are met. Allowing employees to ‘run free’ could prove disastrous and it’s important that management play an active role within their teams. They should display strong ethical values and integrity during all their interactions. The executive board then need to hold management accountable for their departments’ actions and provide guidance where needed.

Conflict of interest checks

Performing background checks on employees when they are hired allows an organisation to establish upfront if a potential conflict exists between an employee and a supplier/customer. As part of the policy, it should be necessary for employees to declare any outside interests that they may have. A register of all the declared interests should be maintained, and relationships with suppliers and customers should be tested against this to ensure that no employees are material business partners of the organisation.

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