The number of companies implementing sophisticated policies to combat corruption risk has soared in the last decade, with almost three-quarters now having internal communication lines to blow the whistle on suspected problems.

A survey of 824 legal and compliance professionals in-house by consulting company Control Risks found that 74 per cent now had defined whistleblowing procedures, up from 42 per cent in a similar survey in 2006.

Companies were now also more willing to complain to a contract awarder if they felt they had lost out due to corruption. Over a quarter (27 per cent) of respondents said they would complain and 19 per cent said they would appeal to law-enforcement authorities, compared to 8 per cent and 6.5 per cent in 2006. Almost a quarter (24 per cent) said they would gather evidence for legal action.

A significant number of respondents said anti-corruption legislation such as the UK Bribery Act was improving the business environment. International anti-corruption laws were making it easier to operate in high-risk markets, according to 55 per cent of respondents.

Nevertheless corruption risk is still deterring many companies from doing business and causing deals to fold.

Of the respondents 30 per cent said the risk of corruption had deterred them from doing business in specific countries and 41 per cent said that they had pulled out of a deal in which they had already invested time and money. Due diligence was the most common source of information which caused companies to withdraw from a deal.

Another 30 per cent said they thought they had lost deals to corrupt competitors.

Despite this companies from the countries with the toughest laws – the UK, US and Germany – were more inclined to take risks than in previous surveys. Control Risks attributed this finding to the robust compliance procedures which such companies now had in place.

A number of law firms have ramped up their efforts in providing advice on internal investigations and compliance issues recently, such as Taylor Wessing which launched an international corporate crime and fraud unit in July. This was the focus of The Lawyer Litigation Top 50 report last year, which revealed that a growth in regulation and investigations was driving growth in litigation practices.

Earlier this year Clifford Chance was retained by listed oil and gas company SOCO, after carrying out an investigation into bribery accusations involving the company in the Democratic Republic of Congo (DRC).

Although 35 per cent of respondents said they had conducted an internal investigation in the previous year after an employee had blown the whistle, and 32 per cent had found evidence of internal fraud. But Control Risks CEO Richard Fenning said companies should not rely too much on compliance.

“Companies need to find a balance and do more due diligence early on in any negotiation or market entry planning, to spot the points of light in countries that may otherwise appear as no-go areas,” Fenning said.

“Another concern is an overreliance on compliance. Often when organisations have comprehensive compliance processes in place, business leaders treat them as a safety net and don’t police ruthlessly enough internally. More than half of the businesses we surveyed hadn’t conducted a corruption-related investigation in two years. Given the size and complexity of most organisations this would suggest there is a danger of a false sense of security in compliance departments,” Fenning concluded.

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