Fear of Corruption Dissuades Overseas Investment, Due Diligence Lacking, Kroll Says
December 1, 2011 in WTO Reporter
By Rachel Boehm
Fear of fraud is dissuading many companies from doing business in at least one foreign country, according to survey results from Kroll’s fifth annual Global Fraud Report.
The international risk consulting company between June and July 2011 polled over 1,200 senior executives worldwide, from an array of industries and functions. Forty-six percent of companies surveyed were dissuaded from operating in at least one foreign country, Amy Malsin, Kroll senior marketing director, told BNA. Of those, 62 percent cited corruption as one of the main reasons for not investing.
There is no question that fear of corruption, procurement and information fraud shapes the choices in doing business overseas, David Holley, Kroll senior managing director, told BNA.
Corruption Risks Said Increasing
Corruption is a growing risk worldwide, Kroll said, despite a dip in the overall incidence of fraud for 2010. In 2010, 75 percent of respondents suffered an incidence of fraud, compared with 88 percent in the prior year. The progress made in some areas was matched, however, by heightened risk in others, Kroll said.
Within the overall fraud category, reported incidents of corruption nearly doubling to 19 percent—the biggest increase of any fraud type scrutinized. Geographically, companies were most dissuaded from operating in Africa (15 percent), China (10 percent), and India (9 percent), with fear of corruption as the leading cause, according to the report.