EY poll finds S'pore firms' ethical business practices wanting

Singapore

SINGAPORE companies are good at ticking the boxes on ethical business practices, but reality is something else.

An EY survey has found that more Singapore organisations have set up codes of conduct, provided training, put in place anti-bribery/anti-corruption (ABAC) policies and whistleblowing hotlines than two years ago, when the survey was last done, but these measures aren't being as effective in catching wrong-doers.

It has to do with people's attitudes. For example, more than a third of the Singapore respondents think ABAC policies are irrelevant and ineffective; and while nearly seven in 10 (67 per cent) of Singapore companies have whistleblowing hotlines, only 62 per cent of respondents say they will use them; fear of retribution is what keeps about a third from doing so.

These are among the findings from EY's 1,508 interviews with employees of large companies in 14 Asia-Pacific (APAC) territories, including 90 in Singapore.

Ethical business practices are important because they are directly related to attracting and retaining talent in the APAC. Almost 80 per cent of the APAC and Singapore respondents polled said they would be unwilling to work for companies tainted by graft; 67 per cent and 70 per cent of APAC and Singapore respondents respectively said having a strong reputation for ethical behaviour is a commercial advantage.

Among Singapore respondents, 84 per cent said their organisations' efforts to combat fraud, bribery and corruption have intensified or been stable in the last two years; the figure for the APAC is 76 per cent.

Reuben Khoo, EY managing partner, Asean leader for fraud investigation and dispute services said: "The tone is being set, policies are put in place. However, in spite of these policies being put in place, there is still room for improvement."

Slightly more than half the APAC respondents said ABAC policies are irrelevant and ineffective, and 40 per cent of companies do not provide ABAC policy training. The corresponding figures for Singapore are slightly lower - 36 per cent and 29 per cent respectively.

In addition, 41 per cent of respondents in the APAC and 38 per cent in Singapore believe a code of conduct has little impact on how people actually behave.

Mr Khoo said: "You may have a code, but 40 per cent think it has little impact on behaviour of employees. It's a tick in the box."

Referring to the fall in proportion of employees prepared to use the whistleblowing hotlines between 2013 and this year (from 81 per cent to 53 per cent in the APAC, and from 71 per cent to 62 per cent in Singapore), he said: "The drop in whistleblower hotline usage appears to be due to respondents being increasingly concerned about insufficient legal protection or the lack of confidentiality for whistleblowers, leading to a risk of retaliation."

He added that it was thus clear that having ABAC policies, codes of conduct and whistleblowing hotlines are not enough; companies need to have "a more proactive compliance monitoring programme and integrity systems where enforcements can be carried out more effectively".

Another survey finding was on the awareness of bribery and corruption from outside parties such as joint venture partners, agents, suppliers and distributors. Slightly more than half (56 per cent) of the APAC respondents and 67 per cent of Singapore respondents named third parties as a risk to their business in relation to ABAC compliance.

At the same time, 72 per cent of the APAC respondents and a significant 90 per cent of Singapore respondents are confident that their organisations are effectively managing the fraud, bribery and corruption risks associated with these third parties.

"We think it's a misplaced confidence . . . They may be clean at the start - doesn't mean clean forever," said Mr Khoo, who noted that the majority of reported US Foreign Corrupt Practices Act cases involved third parties. "There is continued focus by regulators on third parties and the role they often play in bribery and corruption scandals. Companies entering into a business relationship with a third party should conduct as much due diligence as an acquisition, and extend their ethical framework to monitoring third-party behaviour."

Corruption complaints and investigations in Singapore fell to a three-decade low in 2014, the Corrupt Practices Investigation Bureau (CPIB) said in April; the number of people prosecuted as a result of CPIB investigations dipped to 168 last year, from 179 in 2013.