Corporate
India is on a weak wicket when it comes to fixing individual
accountability in its fight against fraud,
bribery and corruption. Higher degree of loyalty to company or colleagues is seen preventing
whistle-blowing by individuals in India.
Around 80 per cent of India respondents in the
EY Global Fraud Survey 2016 believe that prosecuting individuals would help deter future fraud, bribery and
corruption by executives.
Perhaps reflecting that India Inc’s battle against corruption is going
to be a long-drawn one, almost
one-third of (30 per cent) of India
respondents are prepared to book revenues earlier than they should be
recognised, the highest proportion globally (4 per cent), as against 9
per cent in emerging markets.
Around 28 per cent of respondents in India said that bribery is still
being used to win business contracts, as against 11 per cent globally
and 4 per cent in developed markets.
Part of a global survey that involved 2,825 individuals – including
50-odd India-based CFOs, legal heads and compliance heads - India ranks
17th in top 29 markets which considers bribery and corruption as an
on-going challenge.
Around 58 per cent of India respondents said that they believe bribery
and corruption was widespread in the country, as against 39 per cent
globally.
Almost a third of respondents in India (30 per cent) cited loyalty to
their company or to colleagues (28 per cent) as a reason to not report
any incidents of fraud, bribery or corruption. This is a stark contrast
from the global average which ranks at 19 per cent of respondents citing
loyalty to company and 18 per cent to colleagues.
Over two-third of India respondents (70 per cent) justified adopting
unethical means to meet financial targets. These include adopting more
flexible product returns policies, change assumptions determining
valuations or reserves, extend monthly reporting period, backdate a
contract or even book revenues earlier than they should be.
“India needs to fix individual accountability to make its fights
against corruption and fraud more effective,” said Mukul Shrivastava,
partner, fraud investigation & dispute services, EY India.
The survey noted that amidst changing regulatory regime, there has been
a notable increase in enforcement activity by Indian authorities. The
government and financial regulators are taking measures to combat black
money through amendments in the Benami Transaction (Prohibition) Bill,
and legislations focussing on corruption and whistle-blower protection,
the survey added.
“Although 76 per cent of companies have anti-bribery and
anti-corruption policies in place, they must realize that “paper-based
compliance” will not suffice,” the survey said. From an operational
perspective, companies find it a challenge to define key performance
indicators for their compliance functions and demonstrate the value they
deliver to the business, the survey said.
Striking a warning note, the survey noted that many Indian companies are still not recognising
cybercrime as a risk to their business.