One in five executives thinks corruption is widespread in Canada’s business world, EY report shows

One in five executives thinks corruption is widespread in Canada’s business world, EY report shows

Claire Brownell | June 11, 2014 | Last Updated: Jun 11 5:29 PM ET
One in five executives thinks bribery and corruption are widespread in Canada’s business world, according to a new report from Ernst & Young.

The accounting and professional services firm released the figure from its global fraud survey, which polled executives from around the world about their perception of corruption and cybercrime. The survey found that while fewer Canadian executives think corruption is widespread in their country than the global average of 40%, the perception of corruption in Canada has increased since 2012, when 14% of Canadian executives said it was common.

But increased perception of corruption doesn’t necessarily mean business in Canada has become more corrupt, said Mike Savage, a partner with Ernst & Young. Mr. Savage said more police enforcement and some high-profile cases have raised awareness about the issue.

“I think as Canadians, we set really high standards for ourselves in this space, so one in five still feels disturbingly high, even though it’s ahead of the rest of the world,” Mr. Savage said. “Canada is perceived as an easy place to invest in because the playing field is level, the rules are known and corruption doesn’t short the playing field. I think it’s important for us to hold onto this perception and make sure it’s a reality.”

That perception has taken some hits in the wake of bribery charges against former staff and executives at engineering giant SNC-Lavalin and the Charbonneau commission into corruption in Quebec’s construction industry. Canada made headlines last fall when companies based in the country accounted for almost half of all firms blacklisted from bidding on the World Bank’s global projects under its fraud and corruption policy.

Again, that was more about perception than reality, said Milos Barutciski, a partner at Bennett Jones who heads anti-corruption investigations. Almost all of the Canadian companies blacklisted in 2013 were subsidiaries of SNC-Lavalin, placed on the list automatically as part of the World Bank’s policy.

However, Mr. Barutciski said corruption in Canadian business is definitely a reality – and not just in the Quebec construction industry.

“I think those of us in the rest of the country who think, oh gee, it’s a Quebec thing and it wouldn’t happen here – well, you know what, I think those of us outside of Quebec are seeing their own country and their own province through rose-tinted glasses,” Mr. Barutciski said. “[There’s] a growing recognition about some of the old ways of doing business in Canada, which includes the way public procurement is done, which includes the kind of coziness and cronyism between politicians and officials and suppliers.”

The charges related to SNC-Lavalin and changes to the Corruption of Foreign Public Officials Act have also raised awareness of the fact that Canadian businesses need to mind the law when dealing with countries where corruption is common. Mr. Barutciski said the way Canadian companies approach international business dealings is also changing.

“The attitude toward foreign corruption, until recently, was, ‘Look, that’s the way they do it in China, in Italy, in Asia, in the Middle East. Who are we to tell them how to run their world? So when in Rome, do as the Romans do.’ That was the attitude. And that is now coming under pressure.”

James Klotz, a partner at Miller Thomson LLP and chair of the firm’s anti-corruption and international governance group, said increased perception of corruption can be a good thing. If it leads to greater transparency, due diligence and attention to compliance, the perception of more corruption could lead to less corruption in practice, he said.

“It makes companies realize they’ve got to take more care to make sure corruption doesn’t exist. That ultimately has a good effect. Even though the perception ultimately has to match the reality, the reality is we have corruption in some of our system.”

 

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: