![\"corruption\"](\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2018\/09\/corruption-300x225.jpeg\")
Expanding into new markets presents lucrative opportunities, as well as risks.<\/p>\nExpanding into new markets presents lucrative opportunities, as well as risks.<\/p>\n
Potential threats in new territories include corporate corruption<\/a>, malpractices, and fraud<\/a>, which most firms have to face. \u00a0Corruption and fraud cover a wide array of situations, but it is the unobtrusive yet more prevalent forms of fraud and corruption that create the biggest risks for organizations.<\/p>\n Corporate corruption and fraud<\/a> can be characterized into 4 distinct categories.\u00a0 Understanding these 4 categories of corrupt practices prepares the executives to efficiently deal with the troubles they are likely to encounter in their careers.<\/p>\n Most corporations in new markets face problems when their people are asked to make payments\u2014by the local government or political figures\u2014in order to achieve a business contract, acquire regulatory approval of a product, reduce taxes, or avoid customs duties.\u00a0 It is illegal in ethical companies to pay bribes by both the local as well as home country laws.\u00a0 Managers hardly ever make payments openly.\u00a0 This is mostly done through agents or dealers, utilizing unaccounted funds, funding foreign trips, giving gifts, and making donations to nongovernmental organizations as advised by the crooked officials.<\/p>\n Grease payments are demanded for doing routine transactions faster.\u00a0 Most executives encounter requests for grease payment by both government officials as well as by private sector employees. \u00a0In some regions, even commencement of a business is littered with hurdles at each step where executives are often pressurized to pay grease payments or suffer undue delays in processing simple tasks.<\/p>\n In some countries with ineffective rule of law, dishonest officials demand money from businesses by coercing their executives or threatening their operations.\u00a0 Executives new to such places typically fall prey to these coercers and succumb to make payments.\u00a0 Such threats and intimidation are often real based on the coercers\u2019 reputation and past actions.<\/p>\n Another common menace in corporate organization is the involvement of senior executives in fraudulent activities, such as receiving kickbacks and commissions.\u00a0 Many a recent surveys and studies on global fraud have revealed the involvement of senior officials of multinational organizations in the developing markets.\u00a0 Greed is the major factor that tempts senior executives to undertake such fraudulent activities\u2014such as faking the books, stuffing the channel with stocks, and forging parallel agreements with customers.<\/p>\n It is typically the materialistic politicians and dishonest public officials that are held responsible.\u00a0 However, corruption in most circumstances arises out of reciprocal obligation.\u00a0 The leaders or executives who succumb to the demands of the crooked officials or politicians are equally responsible for the act.<\/p>\n To avoid the threats of denting their reputation, organizations must ensure to make dealing with corruption a fundamental organizational capability.\u00a0 A simple way to do it is to devise something beyond policies and controls\u2014such as building a culture of ethics and compliance, or operate ethically in any market around the globe.<\/p>\n It is critical for the organizations to create internal capabilities to resist corruption and inculcate behaviors and mindsets persistent with strong morals to endure such potential threats as they occur.<\/p>\n The 4 principles to combat Corporate Corruption<\/a> are of great assistance to executives in this regard:<\/p>\n Combating corruption becomes easier by establishing appropriate policies, rules, codes, and compliance measures.\u00a0 This starts with assigning appropriate budgets to conduct audits and compliance reviews, training teams to abide by anti-bribery and corrupt practices laws, taking action against corrupt employees, and defining a formal code of conduct for every employee.\u00a0 Effective processes for discounts, gifts, travel, and charitable contributions be laid out; and there should be proper communication of all these policies, codes, and rules to all stakeholders including the customers. \u00a0Likewise, proper fraud investigation processes should be formulated, which should be quick, focused, rational, and impartial.<\/p>\n Interested in knowing more about how to combat malpractices in your organization?\u00a0 You can learn more and download an\u00a0editable\u00a0PowerPoint about\u00a0Corporate Corruption and Fraud<\/strong> here<\/a>\u00a0on the Flevy documents marketplace.<\/p>\n You can download in-depth presentations on this and hundreds of similar business frameworks from the FlevyPro Library<\/a>. FlevyPro<\/a> is trusted and utilized by 1000s of management consultants and corporate executives. Here’s what some have to say:<\/p>\n “My FlevyPro subscription provides me with the most popular frameworks and decks in demand in today\u2019s market. They not only augment my existing consulting and coaching offerings and delivery, but also keep me abreast of the latest trends, inspire new products and service offerings for my practice, and educate me in a fraction of the time and money of other solutions. I strongly recommend FlevyPro to any consultant serious about success.”<\/p>\n \u2013 Bill Branson, Founder at Strategic Business Architects<\/p>\n<\/blockquote>\n “As a niche strategic consulting firm, Flevy and FlevyPro frameworks and documents are an on-going reference to help us structure our findings and recommendations to our clients as well as improve their clarity, strength, and visual power. For us, it is an invaluable resource to increase our impact and value.”<\/p>\n \u2013 David Coloma, Consulting Area Manager at Cynertia Consulting<\/p>\n<\/blockquote>\n “As a small business owner, the resource material available from FlevyPro has proven to be invaluable. The ability to search for material on demand based our project events and client requirements was great for me and proved very beneficial to my clients. Importantly, being able to easily edit and tailor the material for specific purposes helped us to make presentations, knowledge sharing, and toolkit development, which formed part of the overall program collateral. While FlevyPro contains resource material that any consultancy, project or delivery firm must have, it is an essential part of a small firm or independent consultant’s toolbox.”<\/p>\n \u2013 Michael Duff, Managing Director at Change Strategy (UK)<\/p>\n<\/blockquote>\n “FlevyPro has been a brilliant resource for me, as an independent growth consultant, to access a vast knowledge bank of presentations to support my work with clients. In terms of RoI, the value I received from the very first presentation I downloaded paid for my subscription many times over! The quality of the decks available allows me to punch way above my weight \u2013 it’s like having the resources of a Big 4 consultancy at your fingertips at a microscopic fraction of the overhead.”<\/p>\n \u2013 Roderick Cameron, Founding Partner at SGFE Ltd<\/p>\n<\/blockquote>\n “Several times a month, I browse FlevyPro for presentations relevant to the job challenge I have (I am a consultant). When the subject requires it, I explore further and buy from the Flevy Marketplace. On all occasions, I read them, analyze them. I take the most relevant and applicable ideas for my work; and, of course, all this translates to my and my clients’ benefits.”<\/p>\n \u2013 Omar Hern\u00e1n Montes Parra, CEO at Quantum SFE<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":" Expanding into new markets presents lucrative opportunities, as well as risks. Potential threats in new territories include corporate corruption, malpractices, and fraud, which most firms have to face. \u00a0Corruption and fraud cover a wide array of situations, but it is the unobtrusive yet more prevalent forms of fraud and corruption that create the biggest risks… How to Counter Corporate Corruption and Fraud<\/span><\/a><\/p>\n","protected":false},"author":110,"featured_media":3895,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"neve_meta_sidebar":"","neve_meta_container":"","neve_meta_enable_content_width":"","neve_meta_content_width":0,"neve_meta_title_alignment":"","neve_meta_author_avatar":"","neve_post_elements_order":"","neve_meta_disable_header":"","neve_meta_disable_footer":"","neve_meta_disable_title":"","footnotes":""},"categories":[408],"tags":[1296,1293,1295,1297,1294],"class_list":["post-3892","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-management-leadership","tag-bribery","tag-corporate-corruption","tag-corporate-fraud","tag-extortion","tag-fraud"],"_links":{"self":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/3892","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/users\/110"}],"replies":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/comments?post=3892"}],"version-history":[{"count":9,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/3892\/revisions"}],"predecessor-version":[{"id":7945,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/posts\/3892\/revisions\/7945"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media\/3895"}],"wp:attachment":[{"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/media?parent=3892"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/categories?post=3892"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/flevy.com\/blog\/wp-json\/wp\/v2\/tags?post=3892"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
![\"corruption\"](\"https:\/\/flevy.com\/blog\/wp-content\/uploads\/2018\/09\/corruption.gif\")
<\/a><\/h2>\nBribery<\/strong><\/h2>\n
Grease Payments <\/strong><\/h2>\n
Extortion<\/strong><\/h2>\n
Employee Fraud<\/strong><\/h2>\n
Preventing Corruption and Fraud\u00a0<\/strong><\/h2>\n
\n
Have Basic Controls in Place<\/strong><\/h2>\n
Do You Find Value in This Framework?<\/h2>\n