A survey published by global risk consultancy Control Risks found that 55% of the South African companies surveyed avoid certain countries if the corruption risk is perceived to be too high.

Twenty-eight companies, head-quartered in South Africa, and 38 based in the country, participated in the International Attitudes to Corruption 2015/16 survey, which found that 61% of these companies had withdrawn from a business deal at least once, owing to the risk of corruption, despite having invested time and money. This is significantly higher than the global average of 41%.

This risk-averse approach is underlined by other strong prevention measures, such as 54% of South African companies having procedures in place for corruption risk assessment, whereas the global average is only 39%, and 57% of these companies having a standard procedure for integrity due diligence on business partners.

The survey also found that local companies perceive routine governmental transactions as the greatest risk, with 46% viewing the risk as very high and 42% as high.

The South African businesses surveyed showed strong sentiment towards anticorruption laws, with 85% of respondents stating that the laws improve the business environment for everyone. “Although many challenges remain, this is higher than the global average of 81%, a positive indicator that attitudes towards corruption are changing,” says Control Risks.

Although compliance programmes are crucial and the general trend is positive, the consultancy warns that reliance on a legalistic approach to compliance can be dangerous: “Most – [51%] – of the global respondents have not conducted any internal corruption investigations in the past two years, highlighting the danger of waiting passively for a whistle to be blown . . . perhaps suggesting a culture of complacency in some organisations.”

Control Risks Southern Africa senior MD George Nicholls says: “Too many businesses are losing out on good opportunities to corrupt competitors . . . choosing not to take a risk on an investment or entering a new market in the first place for fear of encountering corrupt practices.”

He suggests that companies should look to strike a balance by seeking “points of light in countries that might otherwise appear as no-go areas. Individual regions and businesses in them vary enormously and careful evaluation should be undertaken”.

Further, Nicholls adds that concerns have been raised regarding overreliance on compliance. “Often, when organisations have comprehensive compliance processes in place, business leaders treat them as a safety net and do not undertake independent reviews ruthlessly enough, or reward good behaviour and incentivise teams to prioritise ethical behaviour over financial performance.”

Control Risks commissioned a survey of more than 800 senior legal and compliance professionals in companies operating worldwide to establish whether multinational organisations were sufficiently prepared to manage the complex governance and compliance environment they currently face or whether those responsible for anticorruption and compliance initiatives are finding it difficult to keep pace with global regulations and struggle to protect their businesses across the markets in which they operate. Key to the survey was whether these companies are ready for the challenges that they face in the current compliance environment.