Disclosing Corruption Incidents

In a recent Deloitte survey of companies from around the world, 41 percent of executive respondents “indicated that senior management should investigate and deal with matters internally or wait to see if there are consequences rather than make a voluntary disclosure to authorities if a significant incident of corruption was uncovered at their organizations.”

On the surface, this might lead one to believe that new US government contractor regulations requiring disclosure are being ignored if government contractors responded in the same manner. These regulations, which are part of FAR 3.10, require mandatory disclosure when a contractor has ‘credible evidence’ that their firm has violated the civil False Claims Act (FCA) or has committed certain violations of federal criminal law.

Unfortunately, the survey does not have information about how executives would have responded to this question 10 or 20 years ago; 55 percent of respondents said they would investigate and then make a voluntary disclosure to authorities. So, it’s possible that the number of those who would investigate and make a voluntary disclosure is rising.

It’s also important to note that only 24 percent of respondents were from the United States. Each country (and even industry and organization type) has its own regulations regarding disclosure. A private or non-profit organization in Asia Pacific would have entirely different disclosure requirements relative to a public firm or government contractor in the US.

Ethical Advocate would like to see a similar survey of just those in the US government contractor space to learn how the results compare to the Deloitte survey. It’s our expectation that more US government contractors would make a voluntary disclosure based on the recent regulations. These organizations are required to develop compliance programs, ethics training, and a reporting mechanism, such as an employee hotline. And, those organizations that do not voluntary disclose fraud or government overcharges could face debarment. In the Deloitte survey, the top reason indicated for paying bribes was to garner more business. In the case of government contractors, not disclosing unethical acts could lead to lost business or worse, debarment. So, it stands to reason that more government contractors will line up behind the voluntary disclosure rules…