Blog : BOARD TALK
|Posted on April 26, 2015 at 6:00 AM|
Compliance requirements for business that involve its supply chain have their uses, despite all the moaning that often accompanies new rules in any jurisdiction.
Globally, the number of companies who monitor their business partners at least quarterly has nearly doubled in the past year, while more than 10% of all respondents to a Dow Jones survey now monitor partners daily; an annual increase of nearly 60%.
Companies are taking a firmer stance on responding to unethical conduct with more than three quarters reporting instances of bribery when they become aware of it, according to Dow Jones’s 2015 State of Anti-Corruption Compliance Survey. It was released last week in New York. Full survey results can be obtained here.
Corruption concerns are increasingly having an impact on decisions made by companies about forming or expanding partner relationships and conducting business in emerging markets, "mirroring an ongoing trend over the past three years" says the survey.
It reveals that of the companies represented, more than two-thirds stopped or delayed working with a business partner due to concerns about violating anti-corruption regulations. More than 50% of respondents said they had stopped or delayed a venture into emerging markets for the same reason.
Less than a third of compliance professionals surveyed reported having lost business to unethical competitors, which is apparently a steady decrease from previous years. At the same time, among companies losing business, nearly 70% cite non-compliant competitors and more than 70% mention losses to companies not required to comply with anti-bribery regulations. "This is a notable increase on past years" says Dow Jones.
Joel Lange, Dow Jones
"It's clear from this year's survey that global corporations are being more proactive in their monitoring and disclosure of unethical behavior within their organizations" says Joel Lange, managing director, Risk & Compliance for Dow Jones.
But don't break open the bubbly just yet. The survey also shows that companies struggle with their 'due diligence' and - this is the bit I find most interesting - "an increasing number say that sales agents, senior executives, board members and suppliers should be subject to due diligence."
Of course they should.
Meanwhile.... the Financial Times reports this morning Diageo faces fresh headache with India drinks business.
In case you don't have access, here's a snippet:
"At an emergency weekend meeting, the board of United Spirits, which is now 55 per cent owned by the British drinks group, asked Mr Mallya to step down as chairman after a probe found improprieties in financial transactions between the Indian spirits business and other parts of Mr Mallya’s empire between 2010 and 2012."
But he won't. And he has 3.6m followers on Twitter (@TheVijayMallya no less) and clearly intends to marshal support with his subsequent tweet: "I am not going to submit myself to a trial by media. I know the facts and so do all with fiduciary responsibilities. I have legal rights too.”
And then he tweeted:
"People and media revel in speculation sensationalisation and character bashing. Unfortunately for you I intend to continue as USL Chairman."
Mr Mallya has also pointed out that Diageo was meant to have done months of due diligence.....
The other interesting revelation of the Dow Jones survey is that respondents were divided on whether one can do away with 'facilitation payments' due to 'cultural differences' and more. Oh dear.