The result obtained after the investigation phase was supported with documents proving that in both companies the staff was being bribed and was accepting bribes. In China, corruption can become a “dance” that silently moves among departments and key roles damaging your revenues and your public image (especially abroad). Corruption shapes the mind of your employees, who benefit with small efforts and do not see a real threat corresponding to their actions.
As mentioned, noticing some signals of corruption is possible. In most cases, these can be seen in some employees’ behaviors:
- Relations with Authorities are too good (to be true);
- Frequent entertainment with suppliers (gifts, dinners, …);
- Change of lifestyle: expensive cars, new house, expensive clothes, …;
- Significant personal debt and credit problems;
- Addiction to alcohol, drugs, gambling, …;
- Management compensation linked to unrealistic targets.
Also, being reluctant to provide information to auditors may be a clear sign of fraud.
If you detect one or more of these “red flags” in your enterprise, don’t think about it twice: contact us to perform a first investigation. In China, in many cases, relying on a single individual or on local staff having good relations with Authorities is not prudent. It is advisable to structure cooperative relations with officials, rather than giving free hand to a single person.
Even if it is not possible to totally prevent briberies and corruption, effective strategies can be used. Among others, these can include:
- Check of your employees and managers background;
- Verification of account receivables (double check company’s explanations of total billing);
- Verification of suppliers, when possible;
- Analysis of other payable and liabilities: (i.e. salaries, social insurance payments or pension payments for former employees);
- Strengthen internal control, in particular by promoting ethical practices and transparency, improving communication among employees and encouraging whistleblowing.
Knowing how to read a behavior is sometimes essential to discover illegal practices. Our international professionals are able to mitigate the risk of fraud thanks to more than 15 years of direct experience in China and Asia. Contact us if you have any inquiries.