Five forces that will
reshape the global
landscape of anti-bribery
and anti-corruption

Our five predictions
for the next five years
and beyond

www.pwc.com/forensics

Corruption remains the single biggest
issue facing today’s society

A shared responsibility for making
a difference…

Bribery and corruption – often defined as abuses ofpower by people in positions of authority – are not new.
In fact, they’ve been with us ever since humans began
to organise into recognisable societies. And they’recertainly still going strong: it’s estimated that more than
US$1 trillion is paid each year in bribes globally, and that
US$2.6 trillion is lost to corruption1. That’s 5% of global
GDP – and the true figure is probably even higher.

In light of this situation, it’s not surprising that dealing
with corruption is an issue that’s continuing to rise up
the agenda of governments, businesses and civil society.
Against this background, we examine the themes
shaping the global anti-bribery and anti-corruption
landscape over the coming five years and beyond. The
topography of this future landscape matters to us all.

Against this background it’s not surprising that tacklingcorruption is the focus of massive effort and an everexpanding body of rules and regulations across theworld. It’s now 19 years since the OECD launched
its initiative to bring a harmonised approach to thebattle against corruption, and five years since the UK’s
Bribery Act came into force2. Many other countries havealso taken definitive steps forward to start tacklingcorruption risk in recent years, including France, South
Korea, Brazil, Mexico, China and Argentina. But despite
all of this activity, corruption remains arguably the single
biggest issue facing societies worldwide.
The importance of addressing it is underlined by theclear correlation between corruption and poverty.
Of the over 7 billion people alive today, over 6 billion
live in countries where corruption is endemic3 –with Transparency International’s latest Corruption
Perceptions Index4 citing “a vicious circle between
corruption, unequal distribution of power in society,and unequal distribution of wealth”. What’s more,global migration and terrorism5 mean the effects ofthis cycle are now closer to home than ever before forWestern countries.

Rising to the challenge

In our view, corporations and their senior leaders
have the ability – indeed an economic as well as moral
obligation – to help tackle these issues, by taking steps
to prevent corruption and in confronting corruption
wherever they see it arising. By doing this, they won’t justbe seen as good corporate citizens, but can make a realand positive difference to the world as a whole.

Given the profound harm that corruption inflicts on both
citizens and societies, we believe that tackling it ranks asperhaps the biggest single challenge for all of us. Dealing
with it demands action that goes way beyond developing
a compliance programme and including a line item on arisk register.
Let us look at how the world can rise to thischallenge. It’s down to all of us to work together tomake this happen.

…and rebuilding public trust
Taking determined action will also do something else:
help to close the global trust deficit, to which corruption
and inequality are major contributors – a fact highlighted
in the World Economic Forum’s Global Risks Report6.
Among populations worldwide, growing disparities in
wealth are fostering disillusion and anger. And this anger
now has a voice, through social media and NGOs.
At the same time, as our 20th Annual Global CEO Survey
confirms, there’s a growing awareness that global
corporations are accountable to an expanding array of
stakeholders, including societies and local communities.
Back in 2013, 37% of global CEOs worried that lack oftrust in business would harm their company’s growth.
This year the figure was 58%.

It’s estimated that more than

US$1trillion

is paid each year in bribes globally, and that

US$2.6trillion
is lost to corruption.

7

Source: https://www.oecd.org/cleangovbiz/49693613.pdf
Source: http://pwc.blogs.com/legal/2016/07/the-bribery-act-5-years-on.html
3
Source: https://www.transparency.org/cpi2015/4
Source: http://www.transparency.org/news/feature/corruption_
perceptions_index_20165Source: https://www.gov.uk/government/news/anti-corruption-summitaims-to-secure-global-commitment-against-corruption
6
Source: https://www.weforum.org/reports/the-global-risks-report-2017
7
Source: http://www.pwc.com/gx/en/ceo-agenda/ceosurvey/2017/gx.html
12Our five predictions for the next five years and beyond
1

Enforcement will continue to evolve and spread geographicallyIn the world’s biggest economy – the US – 2016
was a record year for anti-bribery resolutions
and penalties8 , an upward trend that’s being
mirrored in other jurisdictions globally. We
believe that anti-corruption enforcement willcontinue to expand and evolve globally in the
coming years – and that this well-establisheddirection of travel will be unaffected by thechanging political landscape, including the riseof populism.
Traditionally, Western countries have tended
to lead the way, with – for example – the UK
making growing use of the US-style Deferred
Prosecution Agreements (DPAs) it adopted
in the Bribery Act 2010, and France now
enacting its own anti-bribery law “Sapin 2”. But
enforcement of anti-bribery and anti-corruption
regulation is now spreading rapidly beyond thesejurisdictions, as more territories start to take theproblem seriously, and as large economies suchas China join the US in extending the reach of
their enforcement beyond their own borders.
Latin American countries are also increasingly
active and making growing use of DPAs.

As well as reflecting governments’ specificresponses, the advancing globalisation of
enforcement also mirrors the megatrends9
reshaping economies and societies worldwide–most notably the ongoing shifts in economic
power, which are helping to foster ever closer
international collaboration between enforcement
agencies. Rolls-Royce’s agreement to pay £671m
to settle bribery allegations10 followed close
cooperation between the national agencies ofBrazil, the US and UK. And when engineering
conglomerate Odebrecht agreed to pay a record
FCPA settlement totalling US$3.6 billion11 overillegal payments made in about 12 countries,
the case was reported to have involved some 13
agencies around the world. Still more agencies
are now following up related matters, including
allegations of bribery involving senior politicians(with some former presidents among them) thatare developing across Latin America.

9

1

PwC

Rolls-Royce
Rolls-Royce’s
agreement
agreedto payto pay£671m
to settle bribery
allegations.

Enforcement will continue to evolve and spre

Source: http://www.freshfields.com/uploadedFiles/SiteWide/Campaigns/GI/content/GI%20ABC%20guide%202016.PDF
Source: http://www.pwc.co.uk/issues/megatrends.html
10Source: http://www.telegraph.co.uk/business/2017/01/16/rolls-royce-pay-almost-700m-settle-bribery-corruption-claims/
11
Source: https://www.law360.com/articles/875299/odebrecht-braskem-to-pay-3-6b-in-record-fcpa-case
12
Source: http://media.investis.com/R/Rolls-Royce/download/2017/press-release/English-external-release.pdf
8

Liaising across borders in this way not only
extends enforcement agencies’ reach, but also
makes them more powerful. So it’s increasingly
in a corporation’s interest to play ball with themthrough more open cooperation and strategies
such as voluntary self-reporting. For example,
Rolls‑Royce obtained a £240m discount on its
fine for ‘extraordinary cooperation’12. And thecarrot is accompanied by a stick, because if acompany fails to cooperate with the authorities
then the penalties are potentially severe. The
overall effect is to encourage corporations to
be more open, a change which also reflects agrowing awareness that eradicating corruption isin everyone’s interests – including governments
and wider society, as well as agencies andcorporations themselves.

2 Societal action will be more effective than toothless compliance regimes or unenforced regulation
Popular anger over inequality and corruption
has been given a voice in recent years by therise of social media. It’s been further fuelled byevents ranging from the global furore over the
Panama Papers and emissions “diesel devices”
in cars, to the impeachment of the South Koreanpresident on corruption charges13. And mostrecently we saw thousands of Romanians
take to the streets to force their government
to back down on plans to water down
anti-corruption laws14.
What’s clear is that populations are no longer
willing to stay silent in the face of corrupt
behaviour. People suffering the consequencesof corruption now have not only the motivation
but also –increasingly – the means to expose,denounce and confront wrongdoing, oftenwith the support of NGOs and the press. At
the same time, corruption is becoming far
less acceptable in many countries: witness
India’s www.ipaidabribe.com website andzero rupee note.

13
14

These types of public campaigns bringprofound implications, and have spread to othercountries. Experience shows that when it comesto embedding ethical values and changing
behaviour across an organisation, culture
trumps unenforced rules and regulations. And
the threat of public exposure is more likely
than an enforcement action to push leaders andworkforces to embrace cultural change.

In many cases, the relatively greater power ofsocietal action also reflects weaknesses in thepolitical will of a government coupled with nonexistent or sporadic enforcement. While laws
and regulations may have been on the books forsome time, they’re often only just starting to beproperly enforced and resourced. So to play theirfull part in driving out corruption, laws musthave teeth – and be enforced aggressively withunwavering commitment (financial, political andmoral) from governments.

Experience showsthat when it comesto embedding ethicalvalues and changing
behaviour across anorganisation, culture
trumps unenforced
rules and regulations.

2. Societal action will be more effectforced regulation

These impacts are especially clear in industries
that have suffered significant fines for conduct
breaches, such as energy, financial services andpharmaceuticals. In such sectors, there’s a clear
risk of fines coming to be seen as a cost of doing
business. But if a company’s reputation becomesso tarnished that enterprise value decreases asinvestors pull out while customers start walking
away, this has profound effects at the top of thebusiness. What’s more, the public increasingly
expects corporations to behave in line withstandards much higher than just complying withthe law, meaning societal pressure tends to pushbusinesses to go beyond the legal minimum andto do ‘what’s right’ because ‘it’s the right thing todo’, not just because the rule book says so.

Source: http://time.com/4596318/south-korea-president-impeachment-park-geun-hye-corruption-choi-soon-sil-protests/
Source: https://www.theguardian.com/world/2017/feb/05/romanian-government-scraps-corruption-decree-as-opposition-continues

Five forces – Global landscape of anti-bribery and corruption

2

3

Technology will enable automated and preventative compliance

Imagine you’re the CEO of a global corporation,and you’re considering undertaking a majortransaction or expansion into a new market.
You know technology is continually advancing
and evolving, so you ask yourself: “How canemerging technologies help me to make sure
this is the right decision?” You also wonder how
you might identify and address the strategic
threats as well as key risks more quickly andconsistently than before. Clearly, an antibribery and corruption compliance strategy isembedded within these questions – but only as
one risk element integrated with many others.
Zeroing in specifically on that risk element, thenext five years will see artificial intelligence (AI)and automation technologies deliver dramatic
improvements in the speed, efficiency andeffectiveness of anti-corruption compliancestrategy and processes. And they’ll enable anticorruption compliance that’s not only faster but
also more insightful, providing rapid warning of
problems and enable management to take action
quicker to mitigate risk.

3

PwC

In achieving this, a key form of AI will bereal-time intelligence, which combines thecomplementary capabilities of humans andcomputers to get the best out of both. CEOs
are alive to these possibilities: 52% of Global
CEOs are exploring the benefits of humans andmachines working together, according to ourlatest Global CEO Survey.
Further technology advances in prospect include
rapid increases in processing power coupled withmachine learning, allowing sensors to be linked
in real time to data analytics risk algorithms,
thus enabling compliance reviews and risk
assessments to be focused and significantly
enhanced. Also, fraud and corruption analytics
tools will be connected with online training
and Human Resource (HR) systems, while
AI-enabled virtual assistants will provide realtime guidance on compliance to help prevent
problems from taking root.

Third-party due diligence will become more
automated, with workflow, research andtransaction monitoring sensors connected on asingle platform to better guide the process. And
the growing adoption of blockchain will open
up new opportunities for end to end tracking
and controlling transactions more effectively
and transparently which should help to draw
attention to potentially nefarious activities
and actors.

-ne52
nu %
ro semig

So, where is all this taking us? Already, machinelearning can enable the creation of automatic
predictive risk engines that take the parameters
around an action or decision – such as entering a
new market – and produce a risk scoring for the
likelihood of hitting a particular type of businessissue, including corruption. We estimate that infive years’ time, such systems will have evolved
into machine learning environments that processhuge amounts of structured and unstructured
data and rapidly identify the signals of corrupt
behaviour. The potential for applying suchtechnologies in anti-bribery and anti-corruption
is clear – and potentially transformational.

Rolls-Royce’s
agreement toof
pay
globalCEOs are exploring
the benefits of humans
tosettlebribery
andmachines
allegations.
working together.

£671m

4

As societies become increasingly cashless, facilitation payments will fall

A number of countries across the world are
well advanced in replacing physical cashwith electronic means of exchange: notes
and coins now represent just 2% of Sweden’s
economy, compared with 7.7% in the UnitedStates and 10% in the euro area15. Globally,
it’s estimated that the rise of electronic
payment systems and cryptocurrencies
means the number of transactions inphysical cash could fall by 30% in five years.
The more traceable and auditable natureof electronic money means its rising usage
will potentially help to drive out bribes andfacilitation payments.

15

However, this promising prospect comes withsome provisos. By moving to a more cashlesssociety, we’re simply minimising a mechanism
for paying a bribe, rather than changing
the fundamental motivation behind it. And
while electronic cash might have the effect ofpreventing a motorist from bribing a policeman
to avoid a speeding ticket, the bigger challenges
are corporate endorsed corruption (whichrarely involves physical cash) and governmentendorsed corruption, which continues toreinforce ‘pay-for-play’ schemes.

Ultimately, the fact is that facilitation payments
will not end until governments pay their public
sector employees more money. The average
government worker in Asia earns less than
US$20,000 a year, so a facilitation payment of
US$500 or US$1,000 is a reality that will be very
hard to stop. All of this means going cashless will
have some effect for a few, but is not a panacea
for the many.

Transactions inphysical cash could
fall by30%
in five years.

A further consideration is that the positive
impact of electronic payments on corruption will
initially be felt mainly in the developed world –the impact will take longer to feed through to thepoor living in impoverished countries.

Source: https://www.nytimes.com/2015/12/27/business/international/in-sweden-a-cash-free-future-nears.html?_r=0

Five forces – Global landscape of anti-bribery and corruption

4

5

Ethical and transparent businesses will become the new norm

Whether companies like it or not, corporate
information and activities are heading
irreversibly towards greater public
transparency and visibility. With scrutiny
from social media and NGOs meaningorganisations now operate in a “global
goldfish-bowl”, businesses find that everhigher levels of openness are being demandedby the public and forced by regulation. Some
organisations are trying to hold back thetide of transparency by hiding behind dataprotection and confidentiality. But those thatembrace transparency can gain a competitiveedge, by using it to drive culture change andethical behaviour.
This approach also reflects a generationalchange. Today’s millennial workforces are eager– desperate, even – to make a positive difference
to the world. Businesses that harness this energy
by empowering their employees to do the rightthing will increasingly become recognised as
ethical, transparent and well-governed, gaining
higher trust as a result. For some businesses,
this positive journey has already begun.
Think Unilever’s Sustainable Living Plan16
for decoupling growth from environmental
impacts or GE’s widely-recognised sustainability
programme, which seeks to infuse complianceand governance into every aspect ofits business17.

ce regimes or unen16
17

5

Source: https://www.unilever.co.uk/sustainable-living/
Source: http://www.gesustainability.com/

PwC

The effects of such actions extend to the creationof new business models and the attraction ofdifferent kinds of talent. And over the coming
five years, a significant proportion of businesses
will take this type of approach, putting ethics
and transparency at the heart of their corporate
purpose and using these to unite strategy,
governance, risk management and compliance– including anti – corruption compliance – ina single model. Companies who authenticallyembrace this approach to developing theirbusiness on a sustainable basis will increasingly
engage only with other businesses and customers
who genuinely embrace a similar agenda.
Organisations that start doing all this today
have a higher chance of being market leadersin five years’ time. Those that do not may
find themselves increasingly ostracised andoverlooked – save for the attention they receivefrom regulators – when that time comes.

Those that embrace
Rolls-Royce’s
agreement to pay
transparency
cangain a competitiveedge, by using it
to settle
drive culture
briberychange and ethicalallegations.
behaviour.

£671m

Time to go beyond compliance
In combination, the five drivers that we’vehighlighted point to one underlying fact: that an
approach to anti-bribery and anti-corruption
based on “just complying” with the relevant
regulations by doing the minimum possible is nolonger acceptable or sustainable. Instead, company
boards and leaders should look to go beyond
compliance by embedding an ethical culture within
their organisation. Committing to strong andsustainable ethical values is much more than justa mathematical calculation to determine the rateof return – it is about making a difference andimproving society for all of us.

In summary, the time is right, and the need isimperative, for business leaders to harness thepower of their workforces – who themselves
want to make the world a better place – todrive forward a business culture that has zerotolerance for corrupt practice. For organisations,this culture needs to shape everyday decisions
and behaviour by all their people in every
country, supported and enabled by theright technologies.

In closing, a thought on the ultimate victims ofcorruption. As we continue to debate the mostappropriate anti-corruption programmes, andthe need for a level playing field for business tocompete on, let’s not forget the consequences if
we get this wrong – and indeed the implications
for the billions of people who’ll suffer those
consequences every day of their lives.

Not all businesses will achieve this in five
years. But those that succeed in doing so will
be well-placed to win the battle for revenues,
customers, talent and public trust. The opposite
is equally true.

Five forces – Global landscape of anti-bribery and corruption

6

Who to contact?

Kristin Rivera
Global Forensic Services Leader

Manny Alas
Global & US Anti-Bribery and Anti-Corruption Leader+1 (415) 498 6566
kristin.d.rivera@pwc.com+1 (646) 471 3242
manny.a.alas@pwc.com

Mark Anderson
UK Anti-Bribery and Anti-Corruption Leader

Philip Upton
Global Forensic Services Technology Leader+44 (0) 20 7804 2564
mark.r.anderson@pwc.com+1 (646) 471 7508
philip.upton@pwc.com

www.pwc.com/forensics
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