Corporate fraud and corruption in India has taken a slight dip during the financial year 2010-11, according to a survey released on Tuesday by leading risk consulting company, Kroll in partnership with Economist Intelligence Unit in its annual global fraud report.
The survey, which may come as a relief for the scam-battered UPA government, covered 124 top executives working with leading private corporates across India. The survey that began in June this year says the prevalent rate of fraud in India has fallen to 84 per cent during 2010-11 from 88 per cent a year ago.
However, the survey points out that the corruption level in India is still amongst the highest in the world, behind Africa but in line with China.
"A culture of corporate compliance is now likely to become more important when doing business in the country. Companies must, therefore, be aware of the need for forward thinking when reviewing their existing systems. In the infrastructure sector, the potential returns are vast but these must be realised in an ethical way and always with an eye to compliance," says the survey report.
While the government has been engaged with the issue, it remains to be seen whether the demands set forth by the anti-corruption movement will ultimately be met. "If they are, there will be increased transparency for all government entities, and this will affect how contracts are awarded and serviced in the infrastructure sector," the report says.
This year's Global Fraud Survey shows how pervasive the phenomenon of corruption is in India. About 78 per cent of respondents in India said that their organisations are highly or moderately vulnerable to corruption and bribery, compared with 47 per cent of global respondents and 63 per cent of those in Asia.
"There is a slight decrease in frauds and that is also there in the corporate sector. Though India's image has taken a beating globally due to the series of frauds and scams, with investors wary of investments in India, but due to the better opportunities available they keep coming here," Richard Dailly, managing director (MD) and head of Kroll's operations in India told MAIL TODAY over phone.
It is vital that foreign companies fully understand the culture of business in India. The use of facilitation payments is widespread across many sectors, particularly those that involve negotiations or approvals from government agencies. Investors unaware of such practices might incur serious legal and reputational harm, says the report.
Pathetic infrastructure is a continuing source of frustration for residents and has severe consequences for the Indian economy, says the report. Every train derailment, bridge collapse or gridlocked highway means a loss for the country's finances, states the report.
According to Ramon Ghosh is a senior director with Kroll's operations chasing the potentially lucrative returns available in the Indian infrastructure sector, businesses must have adequate procedures in place to prevent corruption, including facilitation payments.
Cash payments in order to make things happen, to both officials and non-officials are normal, says the report, adding that in many sectors it is not seen as unethical but is simply seen as a price attached to doing business. "Firms committed to high standards of corporate integrity need to think seriously about how these issues could affect them," says Dailly.
Dailly also cautioned private sector companies in banking, IT or BPO space and hire large number of employees of being largely exposed to frauds. "There is a lack of awareness amongst big corporate organisations too, to adopt anti-fraud measures," the report says.
Friday, 21 October 2011
Corruption and corporate fraud take a dip in India, says study : North: News India Today
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