NEARLY two thirds of companies fear reputational damage more than fines.
Reputational damage to businesses from association with controversial exposes such as the Panama Papers are more of a deterrent than a fine.
That’s the finding from a poll conducted by governance institute ICSA and company secretarial recruitment outfit The Core Partnership.
Some 61% of those surveyed agreed that reputational damage would be more of a deterrent, while just over a third at 34% said ‘maybe’ and 5% said answered in the negative.
Somewhat bizarrely, not all companies thought their working relationship would be affected if a business they worked with had connections to one revealed to be involved in the Panama Papers leak, with 8% saying that their working relationship would not be affected. Some 24% of respondents did think their working relationship would be affected and 67% said ‘maybe’.
Peter Swabey, policy and research director at ICSA, said: “The line seems to have blurred between people’s understanding of tax avoidance, which is legal, and tax evasion which is not. From a governance perspective, companies should always work within the law, but certain situations require a bit of additional soul searching in terms of what the right thing to do is as opposed to what is purely legal.
“What is morally acceptable can change over time and may differ according to sector, but the governance litmus test should always be ‘Is what we are proposing the right thing to do?’ It comes down to the culture and values of an organisation, but educating people to obey the spirit rather than the letter of the law needs to start early in life.”