News release
Contact:
Katarína Sekulová
EY
Tel.: +421 2 3333 9255
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[email protected]
www.ey.com/sk/media
EY Fraud Survey finds senior managers failing to set right tone on
business ethics

Three quarters of board members or seniors managers consider unethical
behavior that helps their business is justifiable

As many as 81% of Slovak respondents say that corruption is still a widespread
phenomenon in business

Only 11% of Slovak respondents are convinced that laws and regulations
contribute significantly to combating unethical conduct

Only 16% of Slovak respondents say that their company has a whistleblowing
hotline
BRATISLAVA, 5 April 2017 - According to the latest biennial EY EMEIA Fraud Survey, there
has been only sporadic progress made in tackling bribery and corruption across Europe, the
Middle East, India and Africa. The survey of 4,100 respondents from 41 countries shows that
more than half (51%) still perceive corruption in their country as a problem. As many as 81% of
Slovak respondents think that corrupt practices happen widely in business in Slovakia, which is
the fourth worst result of all participating countries. Twenty-seven percent of all respondents
even stated that it is common practice in their business sector to use bribery to win contracts. A
much lower, but still significant 14% of respondents in Western Europe cited this practice.
The EY survey finds that senior management are failing to foster a culture of ethical behavior:
three quarters (77%) of board members or senior managers from the region admit that they
would be willing to justify some form of unethical behavior to help their business survive.
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One third of them is even willing to offer cash payments to win or retain business.
Nevertheless, 28% of all respondents believe that laws and regulations have had a positive
impact on deterring unethical behavior, an increase of four percentage points from the 2015
survey. In Slovakia, the situation is less positive, with only 11% of respondents agreeing with
this statement. In total, 77% of respondents agree that prosecution of individuals would deter
fraud, bribery and corruption, compared to 68% in Slovakia.
“We have witnessed signs of improvement in certain emerging economies. This does not,
however, include Slovakia, where four out of five respondents (81%) still consider corruption a
fundamental problem in the country,” warns Daniel Bican, Partner of EY’s Fraud Investigation &
Dispute Services for Central Europe, adding: “What is even more worrying is that senior
management is not trying to solve these problems, which may have a negative impact on the
younger generation.”
Generation Y, i.e., young people between 25 and 34, constituting 32% of all respondents, has
an even more benevolent attitude toward unethical behavior. Three quarters (73%) state that
such behavior is justifiable if it may help a company, compared with 49% from Generation X
(45 to 54 year olds) who hold the same view. Furthermore, 68% of Generation Y’s
representatives believe that management would engage in unethical behavior to help a
business survive, and 25% of this age group would not hesitate to offer cash payments to win
or retain business. This age category also shows a heightened distrust of their co-workers, with
almost half (49%) believing that their colleagues would be prepared to act unethically to
improve their own career progression, compared with 40% across all survey respondents.
“Management of a company should support a corporate culture in which it is in employees’
interests to act honestly and ethically. Training and awareness programs may play a big role
here, because they will help employees understand the consequences of fraud and corruption,
and encourage them to come forward if they have concerns over unethical conduct.
Nevertheless, mechanisms to report unethical conduct must guarantee protection of
whistleblowers,” continues Pavla Hladká, Executive Director of EY Slovakia’s Fraud
Investigation & Dispute Services.
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Failure to establish a corporate culture which encourages employees to report unethical
behavior
Despite the fact that whistleblowing hotlines are now considered an important part of fraud
prevention programs, only 21% of respondents were aware that such a channel for reporting
unethical conduct existed in their company. In Slovakia, this percentage is even lower (16%),
despite the fact that an act requiring the implementation of internal systems for reporting and
dealing with suspicions of unethical behavior has been effective for more than two years. If
they detected fraud or unethical behavior, Slovak respondents would contact a regulator (36%),
journalist (25%), non-governmental organization (15%), and as many as 7% would advance
the information to their competition. Thirty-two percent of respondents were pressured not to
report their suspicions, with almost two thirds of them surrendering and finally not reporting
anything.
The survey also revealed that the most frequent reasons for not reporting suspicions of
unethical practices in Slovakia were mostly as follows: fear for personal safety (as many as
55% of respondents), reduced possibility of further employment (38%), problems at the current
employer (35%), loyalty to colleagues (33%) and loyalty to their own company (20%).
Respondents could have applied more than one possible answer to this question.
“For many companies, limited progress appears to have been made in providing an effective
mechanism which would allow unfair practices to be flagged up, and tackled actively,” says
Pavla Hladká. “Employees are either unaware what tools to use, or more worryingly, are
pressured not to report their findings. This may suggest that senior management does not
know how fraud and corruption should be solved, or refuses to admit a risk of fraud.
Companies need to consider investing in effective fraud prevention tools in order to protect
themselves from financial losses and reputational damage.”
Monitoring of employee data as internal fraud risk prevention
The survey reveals a tension between the use of technology and the monitoring of employees’
electronic data. On one hand, three quarters of all respondents state that their company should
monitor the activities and communications of employees. Simultaneously however, a significant
portion does not agree with monitoring of emails (EMEIA: 81%, Slovakia: 86%), instant
messaging (EMEIA: 90%, Slovakia: 92%) or telephone calls (EMEIA: 86%, Slovakia: 83%).
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Another important area is protection against cyber-attacks. Forty-four percent of Slovak
respondents stated that their company should have a robust cyber breach response plan
prepared; nevertheless, only 23% said that this plan existed.
“The threat posed by employees is very real for every company, but remains difficult to detect
without monitoring and analyzing data from a variety of sources,” concludes Daniel Bican. “By
focusing on behavioral patterns and breaches of communication rules, companies can identify
individuals who may pose an increased threat.”
-endsNotes to Editors
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About EY’s Fraud Investigation & Dispute Services (FIDS)
Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better
management of fraud risk and compliance exposure is a critical business priority — no matter the size or industry sector. With
more than 4,500 fraud investigation and dispute professionals around the world, EY provides the analytical and technical skills
needed to quickly and effectively conduct financial and other investigations, and gather and analyze electronic evidence. Working
closely with you and your legal advisors, we will assemble the right multidisciplinary and culturally aligned team, and bring an
objective approach and fresh perspective to challenging situations, wherever you are in the world. And because we understand
that you require a tailored service as much as consistent methodologies, we work to give you the benefit of our broad sector
experience, our deep subject matter knowledge and the latest insights from our work worldwide.
About the survey
Between November 2016 and January 2017, 4,100 interviews were conducted in 41 countries across EMEIA by Ipsos MORI on
behalf of EY. The interviews consisted of both face-to-face and online interviews in local languages on an anonymous basis
covering a mixture of company sizes, job roles and industry sectors.
For the purposes of this survey, emerging markets are defined as including: Bulgaria, Croatia, Cyprus, Czech Republic, Egypt,
Estonia, Hungary, India, Jordan, Kenya, Latvia, Lithuania, Nigeria, Oman, Poland, Romania, Russia, Saudi Arabia, Serbia,
Slovakia, Slovenia, South Africa, Turkey, UAE and Ukraine.
Developed markets are defined as: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland and the UK.