Thursday, April 21, 2016

70% Indian business executives justify corruption to meet financial targets, one of the highest in the world

By Our Representative
Top global consultants Ernst & Young’s (E&Y’s) 14th Global Fraud Survey has found that a high 39 percent of business executives in India believe that “bribery/corrupt practices happen widely in business”, which is one of the highest in the world. Of the 57 countries surveyed, a higher percent of business executives of just 16 countries talked of existence of the malaise.
The world average is 39 percent of business executives holding a similar view.
Further, 70 percent of India's business executives surveyed said such actions can be “justified to meet financial targets”. Here, too, a higher percent of executives of merely six of the 57 countries surveyed held a similar view. Among BRICS countries, Brazil's 4 percent, Russia's 26 percent, China's 50 percent, and South Africa's 40 percent business executives think that way.
The results also show that 44 percent of business executives of India expressed concern regarding unethical conduct at work; 58 percent believed that bribery and corruption was widespread in India; and 30 percent stated that loyalty to their company would prevent them from reporting an incident of fraud, bribery or corruption.
Titled “Corporate misconduct — individual consequences Global enforcement focuses the spotlight on executive integrity”, the survey report, in its commentary on India, ironically, praises “government-led initiatives, including tax reforms, regulatory improvements and the Make in India initiative”.
Calling India “a global leader” for Foreign Direct Investment (FDI), with a 48% upsurge in FDI between October 2014 and April 2015, the report says, “The regulatory landscape is evolving quickly in India. The ‘Make in India’ initiative includes a plan for the simplification of regulatory requirements to increase transparency over obtaining licences and approvals.” 
Indian business executives' response
“In 2016, as part of its commitment against corruption, the Indian Supreme Court expanded the definition of a public servant to include private bankers. This move, while clearly impacting the financial sector, is expected to have a broader impact on other highly-regulated sectors.”, the report says.
Even as pointing out that “additional legislation focusing on corruption and whistleblower protection is currently going through amendments in the Indian parliament”, the report says, “A series of bilateral agreements, targeted at uncovering hidden wealth, is underway.”
“At the same time, there has been a notable increase in enforcement activity by Indian authorities”, the report believes, adding, “Such proactive steps could be the reason for India’s improved ranking in Transparency International’s Corruption Perceptions Index, in which the country stood at 76th place in 2015, up from 85th place in 2014.”
The report notes, “Our survey findings provide a similarly positive message, with 58 percent of respondents believing that bribery and corruption happens widely in India, compared to 67 percent in 2014.”
Yet, the report recognizes “the challenges that businesses operating in India still face”, underlining, “Despite the initiatives and the progress, respondents who exited or considered exiting India still frequently cited fraud, bribery and corruption, as well as inconsistent or arbitrary enforcement of laws and regulations, as key reasons for their exit.”
“Corruption continues to be a significant risk for companies working with government bodies”, the report states, adding, “Although 76 percent of companies have anti-bribery and anti-corruption policies in place, they must realize that ‘paper-based compliance’ will not suffice.”
In all, between October 2015 and January 2016, E&Y researchers, in alliance with the global market research agency Ipsos MORI, conducted 2,825 interviews with senior decision makers in a sample of the largest companies in 57 countries.

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