Fraud, money laundering, misselling and other types of misconduct remain endemic in business. This is despite concerted efforts by law makers, rule makers and company executives themselves to clamp down on illegal and dishonest activity carried out within corporations, in Greater China and other parts of Asia.
An indication of the seriousness of the problem was the decision last year by Hong Kong’s Securities and Futures Commission to add new features to its website to make it easier for the public to report suspected corporate fraud and market misconduct. Meanwhile, China’s financial regulators are considering tougher rules and stepping up enforcement action against offenders, according to recent press reports.
It is a serious problem in all industries around the world. According to EY’s 15th Global Fraud Survey of 2,550 executives working in multiple sectors in 55 countries, 11% of respondents had experienced a significant fraud in the last two years; and 33% said that bribery and corruption had occurred widely in business in their country. The consequences for companies of failing to prevent misconduct – or to comply with the laws, regulations, industry standards and internal policies designed to deal with it – are serious.
Clearly business leaders have to act. But how? The starting point must be to build a strong sense of corporate integrity. A company that adheres to sound principles of morality, ethics and honesty will be better placed to combat illegal and irregular conduct. It will also improve its business performance; integrity is not only about stopping what is bad for the company, it is also about promoting what is good.
The corporate integrity agenda should contain four elements: good governance; a culture focused on honesty; effective controls for managing fraud and compliance risk, enabled by the latest technology; and data insight, using predictive analytics, artificial intelligence and other innovative digital methods. Only by following a sound integrity agenda will companies bridge the gap between corporate intentions and actual behaviour.
This FT Roundtable will look at the fraud, misconduct and compliance risks facing companies today in Greater China and Asia generally. It will bring together general counsel, chief compliance officers, chief operating officers, chief risk officers, chief data officers and others from various the financial services, pharmaceuticals, energy and other industry sectors to discuss how best to manage these risks by enhancing corporate integrity.