India has been ranked No. 6 in a survey of 38 countries on unethical business practices, with 80% of the respondents in the country saying bribery is widespread.
Interestingly, 66% of Indian respondents in the survey conducted by EY Fraud Investigation & Dispute Services, said bribes in the form of gifts or cash were acceptable to win business. A full 35% of the respondents said adhering to anti-bribery and anti-corruption policies would harm their competitiveness.
The survey of 3,800 employees in Europe, West Asia, Africa and India between December 2014 and January 2015 showed corruption is most rampant in emerging markets.
Businesses in these regions are under tremendous pressure to perform despite market volatility, geopolitical instability, oil shocks and economic sanctions.
The report said more than half of all managers across the globe were under increased pressure to look out for new revenue opportunities, leaving them with few options. This has resulted in actions that expose businesses to significant fraud and bribery risks.
In India, 59% of respondents said local companies manipulate financial statements to show better performances. While 67% said economic growth was slower than expected, 81% felt managers were under increased pressure to identify new revenue opportunities.
“What we have seen is that fraud is linked to the economic growth of the country. Despite slower than expected growth, companies were under immense pressure to grow. While they have continued to show growth despite stringent regulatory norms in the country, most of them felt anti-bribery policies have impacted their competitive edge,” said Arpinder Singh, partner and national leader, fraud investigation & dispute services, EY Llp.
In India, bribery and corruption were most rampant in sectors such as metals and mining, manufacturing and infrastructure, he said. Some of the recent regulatory changes include The Companies Act, 2013, aimed at strengthening corporate governance standards, the Lokpal Act that received the President’s approval last year and Securities and Exchange Board of India (Sebi) mandating whistle-blowing policies at all listed firms.
The report also said that increased regulatory growth has not dampened growth of companies, with 89% of respondents saying revenue had increased over the last two years. “Irregular practices such as booking revenue from rebates with suppliers early still continue to be rampant. However, the survey does indicate that there is enhanced awareness about ethical business practices and that acceptance seems to be setting in, though it may take time,” Singh said.