"The greatest risk identified in emerging markets is corruption and bribery; almost 50% of respondents identified this as the most threatening," the financial services company said in a press release for its "Global Fraud Survey: Fraud Risk in Emerging Markets."
Both developed (60%) and emerging market (86%) companies said the risk of fraud was prevalent primarily in emerging markets, the company said, adding that many organizations made an investment decision based on multiple criteria, including fraud risk.
"Our survey found that one in five organizations has made a decision not to invest in an emerging market as a result of fraud risk assessment," the company said
Although not mentioned in the report, Russia has been rocked by a series of high-profile corruption scandals and investigations in recent months. President Vladimir Putin said in his May 10 state of the nation address that rampant bureaucracy and corruption are the main problems holding back Russia's economy.
A number of senior security officials, lawmakers, and regional administration leaders have been arrested or are facing bribery and corruption charges.
But the Ernst & Young study also says foreign companies seeking a share in rapidly developing markets do not always reap the benefits of a fraud risk assessment. Two in five companies do not have a formal fraud-countering strategy.
Ernst & Young interviewed more than 500 business leaders, including executives of many major organizations in 19 countries, including Russia and seven other developing states.
