Senior managers failing to foster a culture of ethical behavior, finds EY Fraud Survey

• 43% of MENA respondents still perceive that corrupt practices happen in their country
• 57% of MENA respondents do not believe that management has emphasized the importance of high ethical standards 
• Only 21% of respondents are aware their company has a whistleblowing hotline

Dubai, 30 April 2017:  Despite sporadic progress in tackling bribery and corruption across Europe, the Middle East, India and Africa (EMEIA), 43% of MENA respondents to the biennial EY EMEIA Fraud Survey still perceive it to be a problem in their country. 

The report, ‘Human instinct or machine logic – which do you trust most in the fight against fraud and corruption?’ surveyed 4,100 employees from large businesses in 41 countries across EMEIA.

Senior management are failing to foster a culture of ethical behavior finds the survey: 57% of MENA respondents do not believe that management has emphasized the importance of high ethical standards. Nevertheless, 48% of respondents believe that regulation has had a positive impact on deterring unethical behavior, a significantly higher percentage than global respondents (28%), with 83% of MENA respondents agreeing that the prosecution of individuals would help deter fraud, bribery and corruption by executives.

Global sentiments – Generation Y vs. X

Globally, the Generation Y cohort (25 to 34 year olds), who constitute 32% of respondents, demonstrate more relaxed attitudes toward unethical behavior the survey finds. Seventy-three percent state that such behavior is justified to help a business survive, compared with 49% of 45 to 54 year olds (Generation X) surveyed who hold this view. Furthermore, 68% of Generation Y respondents believe their management would engage in unethical behavior to help a business survive, and 25% of this age group would offer cash payments to win or retain business.

Generation Y also show a heightened distrust of their co-workers, with 49% believing that their colleagues would be prepared to act unethically to improve their own career progression, compared with 40% across all age groups.

Failure to establish a culture of reporting unethical behavior

Despite the fact that whistleblowing hotlines are now considered an important part of a company’s compliance program, only 21% of MENA respondents were aware of such a channel in their company, while 50% would refrain from reporting an incident due to concerns about career progression.

Michael Adlem, EY MENA Fraud Investigation & Dispute Services Leader says:

“Reporting incidents of unethical behavior still remains an issue. Employees are either unaware of the correct channels, or more worryingly, are apprehensive to highlight wrongdoing, which shows a lack of leadership from senior management to tackle the issue. Companies need create more awareness about their whistleblowing channels and communicate appropriate processes to ensure employees know where to go when they encounter unethical practices.”