A new global survey by the UK-based Association of Chartered Certified Accountants (ACCA) understanding the impact of bribery and corruption on SMEs across the world noted that 59 per cent of SMEs and their advisers believed standing up to bribery and corruption will cost them business trade or opportunities.
While strong policies and public positions against bribery and corruption would cost the business trade or opportunities, a number of respondents said it may be the right thing to do and have benefits for businesses.
According to the survey, over three-quarters (77 per cent) of respondents thought such policies would increase customer confidence, and 68 per cent believed it would increase the likelihood of being able to trade with large businesses or public bodies.
“Many very small businesses don’t have the bargaining power to refuse when small bribes are demanded of them. Entrepreneurs have to choose between paying the bribe or losing the business – and often that is no choice at all for someone trying to support a family,” said Jason Piper, ACCA’s Head of Tax and Business Law. ACCA has over 2.47 lakh members in 181 countries.
Since SMEs don’t have a ‘culture’ like big employers, and they don’t have reporting lines and management structures – they are built on personal relationships and daily contact between partners, employees and owners. “That can make it harder for people to recognise when things start going bad and, by the time it’s become obvious, it’s even harder to do anything about it.” the survey said.
49.8 per cent of respondents added that bribery and corruption have a negative impact on the business environment and 66 per cent see it as a concern.
The findings also revealed that awareness and effectiveness of anti-bribery legislation are generally felt to be high – but so are the costs, in direct financial terms and also among SMEs themselves in terms of lost opportunities to trade internationally.
48 per cent of respondents agreed that compliance with local anti-bribery laws has added to SMEs’ costs.
“The implications for small businesses that get caught up in bribery can be significant – often even more so than for major multinationals. Small businesses don’t have buffers of ready cash or assets against which they can borrow. Every dollar, euro or yen spent on bribes is money taken out of profits that would be spent on supporting the local economy – or worse yet, it’s money taken from the business itself, stunting investment and growth,” the survey said.