By- Aparna Deb
Corporate sector in India has concerns regarding fraud, bribery and corruption in their companies. The Mondelez bribery case where the company paid $13 mn penalties to Securities and Exchange Commission (SEC) without admitting or denying to charges that Cadbury India bribed officials to obtain permits for a factory in Himachal reflects the danger lurking in their own organisations.
In a recent survey conducted by it, the consulting firm, Ernst and Young found that 52% those surveyed in the corporate sector have apprehensions about some kind of misconduct happening in their company. This constricts them from providing the information to a third party, such as a regulator or a law enforcement agency. The report is titled Human instinct or machine logic – which do you trust most in the fight against fraud and corruption, 2017.
Only 30% were aware of whistle-blowing hotlines used for monitoring compliance with anti-bribery and corruption laws
“The perception of fraud and corruption in corporate India has seen a marginal but positive shift, led by amplified regulatory scrutiny and emphasis on transparency and governance. However, unethical behaviour at the workplace, including Gen Y has become a serious cause of concern,” said Arpinder Singh, Partner and National Leader, Fraud Investigation & Dispute Services, EY IndiaLevel of confidence while reporting misconduct
Level of confidence while reporting misconduct
In the past two years the change in the political scenario of the country has lead to economic uncertainties and volatility. At this point in time, business conduct is under greater scrutiny than ever before. Businesses now have to be held to account through greater transparency and accountability. According to the report, the never ending uncertainty in the business environment and pressure for an unprecedented growth is the justification for an employee’s unethical behavior in their workplace. Almost 44% of the Indian respondents admitted that they would be unlikely to report fraud, bribery and corruption concerns if it could hamper their future career development within the company and 32% considered it acceptable to offer cash payments to win or retain business.
“Organisations should have a strong code of conduct which represents the core values and principles that guide the conduct of every business. The core principles should create a culture which is free of reprisal or vengeance to deal with issues triggered by or announced in good faith,” said Mr.Sanjay Agarwal, CFO, Tata communications
EY’s Fraud Investigation & Dispute Services evaluates the current state and reveals that 79% of Indian respondents said that prosecuting individuals would help deter fraud, bribery and corruption. Vinit Bagaria,VP Accounts, Spaze Towers, however, is of the different view and believes in a more ground level approach. “Strong internal controls are the only way out to prevent the occurrence of such wrong practices at all levels of an organisation,” says Bagaria.
Also, companies need to go beyond compliance and create an environment that motivates employees to do the right things to tackle these challenges comprehensively.
In an attempt to further restore trust, companies should spread awareness about whistle-blowing hotlines and should have open-door policies that can provide a great fraud prevention system as it gives employees open lines of communication with management. “The senior management should make sure that any disclosures made in good faith or public interest should not lead to unpleasant situations,” says Agarwal.