This is according to Ernst & Young's largest global survey yet on fraud. It also found that 42% of senior executives at top companies polled in SA, compared to 18% in 2010, would be prepared to use entertainment to win or retain business, and 14% compared to 6% previously would use personal gifts.
"These figures show that South African executives appear to have changed their minds about the kind of unethical behaviour they would countenance in order to ensure their companies' survival," said Sharon van Rooyen, director at Ernst & Young's fraud investigation department in SA.
David Lewis, executive director of Corruption Watch, recently expressed his concern about the level of corruption in the corporate sphere.
He said the competitiveness of the country's business environment forced many to be pragmatic and hard-nosed in order to meet targets, a situation that created room for unethical behaviour.
The survey revealed that 15% of the 1700 executives from 43 countries were increasingly willing to make cash payments, versus 9% in the previous survey, and that 5% would be willing to misstate financial performance, versus 3% previously.
One of the key findings was that the pressure to meet revenue targets was undermining executives' commitment to compliance with policies and the law. Almost 40% of the global respondents believed corruption was widespread in their country, and the situation was significantly worse in growth markets such as Brazil (84%), Nigeria (72%), Turkey (52%) and SA (64%).
Ms van Rooyen said it was worrying that only 36% of South African respondents in the survey felt that unethical practices could not be justified to help a business survive a downturn. This was a significant drop from the 64% in 2010.
SA faced a specific challenge in its fight against fraud and corruption, Ms van Rooyen said. While 60% of respondents believed that authorities were relatively willing to prosecute bribery and corruption cases, only 16% saw these prosecution efforts as effective, she said.
The survey raised serious concerns about the worldwide role of strategic decision-makers such as chief financial officers, after 15% of the respondents indicated they were willing to make cash payments to win business, with 4% being willing to misstate financial statements to survive in an economic downturn.
Although the number of financial heads who were willing to encourage corrupt acts was small, it was still a worrying development given their crucial linkage role between the business and the board, said David Stulb, global leader of fraud investigation and dispute services at Ernst & Young.
The survey found that some of the biggest cases of financial statement fraud had been perpetrated by or with the complicity of chief financial officers.
"While these findings are not consistent with our own experience of chief financial officers, responses among the nearly 400 interviewed should be cause for alarm for stakeholders," Mr Stulb said.
Source: Business Day via I-NET Bridge
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