Respondents are from MNCs in India, US and UK.
By R Chandrasekaran
CHENNAI: A large number of people believe that inadequate enforcement of laws is the primary reason for increase in bribery and corruption, according to a survey conducted by Federation of Indian Chambers of Commerce and Industry (FICCI) and Ernst & Young.
Approximately 89% of those surveyed blamed inadequate enforcement of laws for the current status of bribery and corruption in the country. The survey was done through an online questionnaire between March and May with respondents from domestic, Indian and foreign MNCs in the United Kingdom and the U.S. having an annual income of Rs.50 – Rs.100 billion.
The survey comes on the back of multinational organizations’ increasing pressure to improve their anti-bribery and anticorruption compliance programs as they have to meet different jurisdictions and enforcement of laws and regulations to battle bribery and corruption charges. In India, Wal-Mart has been charged of illegal lobbying and bribery.
The survey also disclosed that corruption is having an unfavorable impact on Indian economy. Approximately 83% of the polled respondents felt that the recent epidemic of scams will undoubtedly have a negative impact of foreign direct investment (FDI) inflows even as India is battling to increase the inflows.
In an interesting survey outcome, 73% of the respondents from private equity companies believe that corruption will hurt fair valuation of the business when a company from a particular sector is believed as highly corrupt.
In another questionnaire, 77% of the respondents felt that the managing directors or the CEOs are responsible to manage the bribery and corruption-related issues. The survey revealed government and public sector, infrastructure and real estate, metals and mining, aerospace and defense, and power and utilities sectors are the most vulnerable to corruption.
The survey also suggested that more number of respondents seem to have been aware of the unprincipled business conduct that includes accounting malpractices to conceal bribery and corruption, gifts given to third parties and agents to pay bribes.
However, majority of the respondents said that they were hopeful that new regulations such as the Companies Bill 2012 would make a difference and reduce fraud, bribery and corruption.
Meanwhile, FICCI president Naina Lal Kidwai commented, “corruption invariably increases transaction costs and uncertainty in an economy while lowering efficiency by forcing entrepreneurs to divert their scarce time and money to bribery rather than production.”
To contact the author, email to rchandrasekaran@americanbazaaronline.com