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Global Spotlight: Romania

Romania has a reputation for being rampant with fraud, on both the political and economic level. But the nation has just seen the formation of the Romanian Treasurers Association, a group of corporate treasury officials and chief financial officers aiming to collaborate and strengthen the way business is done in Romania.

The latest research finds discouraging facts about Romania’s state of fraud and corruption. But it also reveals a new level of optimism by the nation’s corporate officials, and signs that Romania could be leaving its notorious reputation behind.

A Market Of Fraud

While Romanian Prime Minister Victor Ponta faces charges of money laundering and tax fraud, the country’s corporate world is fighting its own battles when it comes to financial corruption.

Ernst & Young conducted a survey of thousands of employees in 38 nations to gauge their stance on corporate fraud and corruption. According to Ernst & Young Senior Manager for Romanian Operations Laura Lica-Banu, “39 percent of the Romanian respondents believe that bribery and corrupt practices happen widely in the local business environment.”

These findings, experts suggest, are harming Romania’s business when it comes to creating new partnerships abroad and encouraging companies outside national borders from doing business with them.

Separate research from payments company 2Checkout focused on how eCommerce is a particularly weak point in Romania. Last year, the firm published its Fraud Index Report, which found Romania to be among the world’s worst online commerce fraud markets. Of particular interest in 2Checkout’s findings is that billing addresses can be a key indicator of fraud levels. According to researchers, eCommerce orders with a Romanian billing address are more than three times more likely than the global average to be fraudulent. The nation was found to be in the top three markets for having the most fraudulent billing addresses.

According to 2Checkout, the findings suggest that sellers are deterred from doing business with Romanian buyers, a conclusion that harms the nation’s position in cross-border commerce.

The most recent research on the topic is no less discouraging. Forter research published in May found that Romania is Europe’s highest fraud country and the world’s fifth highest with regards to eCommerce. Researchers examined more than 1 million online commerce transactions in 2014 to obtain the results. In looking at the data, Forter concluded that eCommerce fraud can run rampant in economies where consumers and businesses may be struggling but still have access to relatively sophisticated digital technologies.

Treasurers Band Together

The formal launch of the Romanian Treasurers Association (ATR) occurred earlier this year, bringing together a union of professionals with common goals surrounding corporate treasury, corporate finance and other enterprise-related economic matters.

Though its formal formation occurred in early 2015, the group has been active since 2013 and held an event earlier this month to commemorate two years of action in Romania. According to reports, today, the group has about 100 members, including corporate treasurers and chief financial officers.

Members of the ATR are looking to strengthen their competitive stance and reputation within a global market. Reports added that the group also aims to “promote the profession of corporate treasurer and corporate finance,” according to Romanian news publication ActMedia in a report last week.

While there is no explicit mention of the ATR’s goals when it comes to combating fraud, industry experts say anti-corruption efforts can originate with the corporate treasurer. According to treasury management firm Kyriba, “while there is no single magic bullet to prevent fraud, organizations need to implement both human and technology processes to minimize the risk.” The firm added that the corporate treasurer can take the lead in launching cloud-based tools and stronger security measures for corporate bank accounts.

The climate in Romania is improving. Recent anti-corruption efforts have proved to be effective, and according to experts, they have encouraged more foreign direct investment in the country.

Ernst & Young’s Lica-Banu, for instance, concluded that optimism about anti-corruption measures has improved in the last couple years. More than half of the respondents in the firm’s survey said that their companies now have an anti-corruption policy in place, while half said they have received anti-corruption training. Fifty-one percent agreed that senior management officials at their companies display high ethical standards.

“The Romanian business sector moved in a good direction,” Lica-Banu said. “There is a  stronger commitment of the senior management in communicating the anti-corruption policies and granting a special attention to the reputational risk that could affect the business.”

The nation has struggled to combat its reputation of fraud and corruption, but Romanian businesses have begun to enact measures to improve the country’s global standing in the corporate world. With the launch of the Romanian Treasurers Association, the research suggests that corporate treasurers are in a unique position to take the lead in combating fraud, encouraging foreign deals and improving the economic climate of their country.


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