Study: More than half of private sector managers have witnessed corruption

(Pixabay)
1/25/2016 1:14 PM
Category: Economy

A new study shows that 57 percent of Estonian top and mid-level managers have encountered at least one type of corruption, most often kickbacks and conflict of interests, within their business sector. Bribery, fraud and extortion are reported less frequently.

Yet, according to a study into private corruption in Estonia and Denmark, few find it acceptable and even fewer actually participate in it. Even so, common excuses for engaging in corruption are that "everybody else is doing it" or that it follows from the practice of the firm, presumably not on written instructions but understood as an informal instruction from the management. Both excuses are rooted in the fear of losing business if the company plays by the book while competitors continue to use illicit methods.

The study found companies with fewer than 10 employees and those financed mostly by domestic capital invoke such excuses to a markedly higher degree than larger companies and companies where the majority of the capital is foreign.

Consequences of corruption are seen mainly in terms of damage to the company's reputation, as well as financial losses. Compared to Danish managers, Estonians are less concerned about the impact a case of corruption within their company would have on their personal careers.

The vast majority of managers in both countries said they would report corruption it they witnessed it, yet only 27 percent of Estonian managers find law enforcement (police or prosecutors) effecve, compared to 72 percent of Danish managers.

The survey was conducted by the Ministry of Justice, in cooperation with Tartu and Aarhus universities to map the extent and forms of private corruption in Estonia and Denmark. The report, published today, is based on a comparative study of 500 top and mid-level managers from each country. A polling company conducted a survey in August 2015 via telephone interviews.

Following the study, Estonian businesspeople were invited to comment on the proposed anti-corruption measures in five separate regional focus groups. The measures include manuals on how to recognize business corruption, developing access to background checks during the hiring process, and improving procedures of reporting illicit business practices (hotlines or appointment of independent trustees).

M. Oll

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