How to prevent corruption in your company

HRM speaks to one of Deloitte’s experts about how to keep corrupt practices from creeping into your organisation.

How to prevent corruption in your company
Auckland Transport (AT) is currently investigating allegations of misconduct and a serious conflict of interest among its staff.

According to The New Zealand Herald, a spokesman for AT said the organisation was conducting investigations and inquiries into the matter – although no specifics around the allegations were confirmed.

This case is not linked to the recent revelation involving three top transport officials who stand accused of bribery involving payments of over $1 million.

Their trial is scheduled for next September, the Herald reported.

Former senior Auckland Transport manager Murray John Noone faces six bribery charges, to which he has pleaded not guilty.

Barrie Kenneth James George and Stephen James Borlase also face trial, and have pleaded not guilty to the charges.

According to research by Deloitte, almost a quarter of organisations in Australia and New Zealand have experienced one or more known instances of domestic corruption in the last five years.

These instances were mainly manifested in – but not limited to – incidents involving the giving or receiving of secret commissions, ‘kickbacks’, ‘under-the-table’ payments, and favours.

HRM spoke to Jason Weir, partner at Deloitte Forensic New Zealand, who explained that there were three key things that organisations need to do in order to protect themselves from corrupt practices.

1. Get the “tone at the top” right

“If the leaders are consistently seen as acting ethically, it helps drive the message that the expectation is staff will also act ethically,” said Weir.

2. Make it easy for people to make tip-offs

Weir advised that this applies to everyone – from staff to suppliers and customers.

“Research consistently finds that most fraud and corruption is discovered by way of tip-off, typically accounting for over 40% of frauds detected,” Weir said.

“This mirrors what we see on the ground here in New Zealand. In most fraud and corruption cases we deal with, there are normally a significant number of red flags which are overlooked by colleagues.”

He outlined the “ingredients needed to leverage this powerful force”:
  • Staff need to know what fraud and corruption looks like so it is a good idea to regularly run fraud and corruption awareness training
     
  • Staff, suppliers and clients need to know what the options are available for making a disclosure and have confidence in making disclosures.  Increasingly we are seeing New Zealand organisations use “whistle-blower lines” for this purpose.  We have seen New Zealand organisations achieve excellent increases in the level of disclosures about fraud and corruption issues by promoting the options available.
3. Having a strong control environment

“A strong control environment enables organisations to reduce the risk of fraud and corruption risk,” said Weir.

“The controls include processes when hiring or promoting staff (such as background checks), receiving funds, and making payments.

“Increasingly we are seeing clients also leverage fraud-focussed data analytics to provide comfort that the controls have been working as expected.”

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