Fight for survival threatens company rules

Shaky moral ground: many Swiss think bribing to win contracts is acceptable in an economic crisis Picture Press

Many Swiss workers would be prepared to turn a blind eye to fraudulent behaviour to keep their firms afloat during the economic storm, a survey has found.

Some 40 per cent of respondents thought some forms of unethical behaviour, such as bribing to win contracts, would be currently acceptable. European counterparts are even more willing to bend the rules.

The European corporate fraud survey by consultancy firm Ernst & Young threw up some worrying data about how far workers would be prepared to go to ensure the survival of the company they worked for.

A quarter of Swiss employees believe it would be justified to “entertain” clients to retain business – more than the European average of 19 per cent. The number shrinks slightly to 22 per cent when gifts are involved (Europe: 24 per cent) and a fifth said it was acceptable to offer cash to win contracts (Europe: 25 per cent).

However, well over half of Swiss respondents said all such behaviour would be unacceptable, compared with 40 per cent of other Europeans.

Conflicting emotions?

Unsurprisingly, managers are singled out by the overwhelming majority of respondents as the people most likely to perpetrate such fraud as they are better placed to carry out deception.

Perhaps more puzzling is the belief that Swiss managers are more likely than European counterparts to cut corners to meet targets. Despite this perception, the survey found that Swiss workers still trust their bosses.

“Most of the employees trust the management, but on the other hand they would expect them to cut corners in order to secure business and the survival of the company,” Ernst & Young fraud expert Michael Faske told swissinfo.

“This is not really big corruption like bribing officials or violating official laws. It is more like entertaining people or short-cutting regulations.”

The surprisingly high number of workers prepared to stretch corporate regulations has been put down to the extreme economic conditions that threaten to derail many companies.

More than a half of Swiss employees surveyed believe corporate fraud will increase for a range of reasons. These include a lack of focus on compliance issues as other problems take precedence, a desire to keep bonuses and the perceived need to manipulate figures to artificially boost the perception of performance.

Redundancies affect fraud

“Most people expect a higher risk of being a victim of material fraud in times of economic downturn. There is a certain motivation for people to show numbers as being better than they are,” Faske told swissinfo.

Another threat to corporate law and order is mergers and acquisitions that could proliferate as stronger companies look to absorb those that are in trouble. Some rule-breaking could be inherited by such a deal, but the complications of merging staff and procedures could increase the risk of fraud.

Redundancies could also adversely affect business conduct, especially if auditing offices lose staff and morale is drained.

But despite the concerns relating to future fraudulent acts, more Swiss staff than any other country surveyed – 80 per cent in Switzerland compared with the European average of 70 per cent – were “confident” or “fairly confident” their firm was free of significant criminal activity.

“In Switzerland, certain types of fraud, such as corruption, are committed less often than in other countries. It is part of the culture of business in some emerging economies to entertain and award facilitation payments to win business,” said Faske.

Matthew Allen, swissinfo.ch

In brief

The Ernst & Young European fraud survey 2009 conducted 2,246 interviews across 22 countries (101 in Switzerland).

Participants were employed in companies with over 1,000 employees and were stock exchange listed or multinationals. Most respondents were shop floor workers, with just 36% junior management or above.

The companies covered the manufacturing, technology, science, consumer products, financial, transport, energy, real estate and professional services sectors.

The survey threw up some interesting and conflicting results as the turbulent economic conditions confused perceptions about ethical business practice and the integrity of managers.

Some 85% of Swiss workers believe in the integrity of their managers, however 85% strongly agreed or tended to agree that managers were likely to cut corners to meet targets under bad economic conditions.

As many as 80% of Swiss respondents felt that their firm was free of significant fraud, but 53% expected fraud to increase.

But the Swiss had more faith that their firms were doing more (51%) to crack down on fraud than their European counterparts (44%).