1. With the global chemical industry expected to grow to over $5.5 trillion in revenue by the end
of 2020 driven by expansion in international markets,1
managing fraud risk and compliance
exposure is a critical business priority. Law enforcement agencies, including the United States
Department of Justice (DOJ) and the United States Securities and Exchange Commission
(SEC), are increasingly focused on individual misconduct and have heightened the pressure
on companies to mitigate fraud, bribery and corruption. In this context, executives need to be
confident that their businesses comply with rapidly changing laws and regulations wherever
they operate. While many businesses have made progress in tackling these issues, there
remains a persistent level of unethical conduct.
EY’s Global Fraud Survey 2016 represents the views of nearly 3,000 decision makers in 62
countries and territories, and provides compelling insight into perceptions of fraud, bribery
and corruption across the globe. The following summarizes the insights of the 363 survey
respondents from the chemical industry.
EY’s Global Fraud Survey
2016
Chemical industry results
Download our Global Fraud Survey 2016 report: ey.com/globalfraudsurvey2016
13%
indicated that they would be
willing to provide personal gifts in
order to win or retain business
Key findings
23%
indicated that they would be
willing to provide entertainment
to officials in order to win or retain
business
indicated that they do not include
country-specific risks in due
diligence procedures
33%
37%
indicated that they
believe bribery and
corruption practices
happen widely in the
industry
18%
indicated that they do not
include identification of third
parties such as vendors or
distributors in due diligence
procedures
27%
indicated that they do not
include an assessment of
anti-corruption policies in
due diligence procedures
31%
indicated that they believe
regulators appear willing
to prosecute cases of
bribery and corruption and
seem effective in securing
convictions
Efforts to minimize the risk of corruption
Compliance
Execute a comprehensive compliance
program that incorporates anti-bribery/
anti-corruption (ABAC) policies, travel
and entertainment procedures and
localized training
Cybercrime
Develop a cyber breach response plan
that brings all parts of the business
together in a centralized response
structure
Anti-corruption due diligence
Undertake due diligence during
M&A and of high-risk third parties
such as distributors, sales agents,
exclusive-use tollers, consultants
and custom brokers
Fraud risk assessments
Per COSO’s 2016 Fraud Risk
Management Guide, perform
comprehensive fraud risk assessments
to identify specific schemes, assess the
likelihood and significance, evaluate
fraud control activities and implement
actions to mitigate fraud risks
Whistleblowing
Establish clear whistleblowing channels
and policies (in local language)
that not only raise awareness of
reporting mechanisms, but encourage
employees to report misconduct
Finance
Adequately resource compliance
and investigations functions so that
they can proactively engage before
regulatory action
1. MarketLine, Industry Profile - Global Chemicals, June 2016.

2. EY | Assurance | Tax | Transactions | Advisory
About EY
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services. The insights and quality services we deliver help build trust
and confidence in the capital markets and in economies the world
over. We develop outstanding leaders who team to deliver on our
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© 2016 EYGM Limited. All Rights Reserved.
EYG No. 03355-161Gbl ED none
Contact information
For further information, visit: ey.com/globalfraudsurvey2016
or contact:
Nelson Luis | Americas Chemical Industry Leader
Fraud Investigation & Dispute Services
T: +1 215 448 5056
E: nelson.luis@ey.com
Jill Birney | Chemical Industry SMR – Fraud/FCPA
Fraud Investigation & Dispute Services
T: +1 215 841 0643
E: jill.birney@ey.com
How mature is your organization’s anti-corruption program?
Limited and inconsistent
compliance program
Best-in-class
compliance program
High risk
Metrics
Limited Core Leading
• “Paper Policy”
• Code of Conduct
• Ethics hotline
• No fraud risk assessment
• Lack of management
sponsorship
• Limited fraud risk assessment
• Limited training
• Consistent standards and
policies
• Reactive monitoring and
reporting
• Gift logs
• Robust training framework
• Feedback to critical ABAC functions
• Specific monitoring controls and
reporting for identified areas
• ABAC language in all contracts
• M&A FCPA due diligence
• Third-party due diligence
• Legal oversight of facilitating
payments
• Multi-disciplinary team responsible
for ABAC program
• Integrated code of conduct and
anti-corruption policy
• Enhanced, global risk-based
approach
• Onsite ABAC compliance assessments
• Global standards and processes
• Active monitoring and reporting
(interviews, testing transaction)
• In-person training at high-risk locations
(in local language)
• Forensic data analytics
• Exercise audit rights (JVs,
distributors, tollers)
Individual accountability for corporate wrongdoing
Board members and senior management should be aware that they and their employees are under increased
personal scrutiny in matters in which, in the past, only the company might have been held accountable. The
“Yates Memo,” a 2015 memorandum issued by the DOJ, detailed steps that prosecutors will take to strengthen
their pursuit of individuals. By holding individuals accountable, prosecutors hope to deter future illegal activity and
incentivize change in corporate behavior.
Building on the requirements of the Yates Memo in April 2016, the DOJ announced the introduction of a pilot
program which encourages companies to voluntarily self-disclose Foreign Corrupt Practices (FCPA) related issues.
In exchange for disclosure, full cooperation with any government investigation, and the timely remediation of
identified gaps in internal controls and compliance programs, companies may be eligible for up to a 50% reduction
in fines, potentially avoid prosecution and/or be subject to a court-appointed monitor.
How are companies funding its risk mitigation efforts?
The survey findings demonstrate a continued prevalence of unethical behavior which places businesses at risk for illegal conduct. With the heightened level of
regulation and businesses dealing with budget constraints in the chemical industry, investing your time and resources to manage risk is critical. Leading chemical
companies are funding aspects of its legal, compliance and internal audit functions through cost saving and recovery mechanisms. Examples of the types of
high-impact audits chemical companies are performing to monitor compliance and ensure maximum value is derived from its business partners include:
Cost saving and recovery mechanisms
• Forensic contractual compliance assessments
(aka licensing and royalty audits)
• Recovery of outstanding cash advances
(ex-employees, non-active vendors)
• Forensic data analytics (fictitious vendors, duplicate
payments)
High-impact audits
• ABAC/FCPA compliance assessments
• Code of Conduct/FCPA training in local markets
• Third-party risk management (screening, background
checks, exercising audit rights)
• Trade control/OFAC
• Cyber breach assessments
• Chemical facility anti-terrorism standard assessments
82%of our chemical survey
participants indicated
that they believe
prosecuting individual
executives will help deter
future fraud, bribery and
corruption by executives
Helps fund these audits