Corruption remains major cost for honest companies

Corruption is still a major cost to international business, finds the latest survey from global business risk consultancy, Control Risks.

It found that 41% of global respondents reported that the risk of corruption was the primary reason they pulled out of a deal on which they had already spent time and money.

But the picture is improving. Companies from countries with tight enforcement report fewer losses than before from corrupt competitors. In 2006, 44% of US companies said they had lost out to corrupt competitors, compared with only 24% in 2015. These figures are echoed for Germany and the UK.

The survey shows that companies are now more willing to challenge when faced with suspected corruption. Over 38% of companies said they would complain to a contract awarder if they felt they had lost out due to corruption, compared to just 8% of respondents in 2006. In 2006, only 6.5% of respondents said they would appeal to law-enforcement authorities, compared with 19% of global respondents in 2015, with 24% of respondents now saying they would try to gather evidence for legal action.

Companies feel that international anti-corruption legislation is improving the business environment. Most respondents felt these laws made it easier for good companies to operate in high-risk markets (55%) and serve as a deterrent for corrupt competitors (63%). This was particularly true of companies in developing markets: 79% of Mexicans agree or strongly agree, as well as 68% of Indonesians, 64% of Brazilians and 53% of Nigerians. In the US 54% say tough laws make it easier to operate in high risk markets, while 42% disagree.

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