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A survey by Control Risks, a global risk consulting firm, and Economist Intelligence Unit (EIU) reveals Indian companies are not prepared to meet the challenges of adhering to international anti-corruption laws and not to mention a tightening domestic regulatory framework. Giving bribes also increases the risks of prosecution and fines and reputational damage for the Indian companies.
That’s not all, the survey says, Indian companies lag behind their global peers in providing anti-corruption training to their employees, having whistleblowing mechanisms and budget dedicated to anti-corruption initiatives. With many companies embroiled in the recent 2G spectrum and Coal gate, and NSEL scams, many of the key findings of the survey are not surprising:
- 62% of Indian companies surveyed do NOT have a formal policy statement forbidding bribes to secure business as compared to 23% of US, and 35% of global companies.
- 91% do NOT have specialised anti-corruption training for employees, as compared to 74% of global average and 52% of US companies.
- Indian companies are LEAST likely to have whistleblowing mechanisms - 24% have a confidential whistleblowing mechanism as compared to 40% of global and 52% of US companies.
- Only 18% are planning to increase spend on anti-corruption measures – LOWER than the global average of 35% and the US average of 48%.
Indian companies fare better in:
- 62% HAVE policies forbidding so-called ‘facilitation payments’, better than the global average of 53%.
- 73% HAVE a standard clause in agreements with third parties barring them from paying bribes on company’s behalf, better than the global average of 64%.
- 60% HAVE board-level support for anti-corruption – better than the global average of 53%.
- 64% HAVE procedures for integrity due diligence on prospective business partners – better than the global average of 50%.
The biggest concern: pressure to pay
Respondents were asked to select their ‘two greatest concerns’ from a list of five risk areas:
The top “two greatest concerns” for Indian companies are demands for operational bribes (76%) and risks associated with third parties (69%). Indian companies are much more concerned regarding these risks than their international counterparts, the global averages for these two risks are 58% and 52% respectively.
QUOTE:
“This is a challenging world for business - good companies may wish to comply with their countries’ anti-corruption laws, but are disadvantaged by competitor companies not playing by the rules. But the impact of not having proportionate anti-corruption policies in a company can be severe – threatening their reputation and operations.”
